| Abstract [eng] |
Study aimed to evaluate the impact of subsidized employment – a measure used to increase employability of the unemployed persons by providing financial incentives to the employers. The focus of the research was to understand how the measure changes participants’ employment situation. The analysis intended to provide a broader understanding of heterogeneity of the impact on various subgroups with a propose to give recommendations on a better implementation of subsidized employment. Two hypotheses were tested in the analysis. The first hypothesis was based on the literature of statistical discrimination and foreseen that the measure should have a larger and more sustainable impact on the participants that face more intense discrimination in the labour market. It was based on the insights that wage subsidies should change employers’ preferences and encourage them to employ persons who would normally be far behind the other candidates. The second hypothesis was based on the matching theory and forecasted that the measure would be more effective on unemployed persons that are more qualified. The argumentation behind it was that even though employment subsidies assure entrance to the labour market the latter success of keeping the job is related to one’s performance. It is less likely that a person with lower qualification would be able to meet employer’s expectations and stay in the labour market. Counterfactual impact evaluation methodology was used to test the hypotheses. More specifically, propensity score matching method was used to create treatment and target groups, while difference-in-differences method was used to measure the net effects of the intervention. The research relied on the administrative micro-data collected by Lithuanian Labour Exchange and the State Social Insurance Fund Board. It included depersonalized information on the participants of the European Social Fund funded project “Promotion of employment opportunities” and information on the other registered unemployed persons during the project’s implementation period (1 December 2008 - 31 May 2011). The tendencies of what happens to the participants after the end of subsidies (i.e. length of employment at the subsidized company and time spent searching for the next job) were also overviewed. The results revealed that subsidized employment has a positive, yet decreasing, impact and there is a clear differentiation of both impact’s size and sustainability depending on the characteristics of participants. As it was foreseen by the first hypothesis, the effect on the days spent in employment per year was higher to those, who faced most intensive discrimination in the labour market. However, this independent variable could not explain differentiation of the sustainability. Testing of the second hypothesis provided insights on this aspect. The research showed that the measure had larger and more sustainable impact on qualified persons than those who have lower qualification. The results also revealed that qualified persons stayed longer in the subsidized workplace and spent less time searching for a new job, which might explain the differences in the impact. Based on the results of the evaluation, the list of priority subgroups to participate in subsidized employment measure in Lithuania was provided. The measure should be targeted towards long-term unemployed and persons that are over 50, regardless their level of qualification, as well as qualified unemployed persons under 29. Inclusion of majority of other subgroups is also recommended; however, in order to get better results, subsidized employment should be combined with additional activation measures. The only subgroup that should not be subsidized is persons starting activity according to their specialty or profession. The study revealed that their employment indicators are high even without subsidized employment intervention, thus the investment does not create any additional positive impact. |
