Impact of work-related activities on the outflow to employment and education within guarantees JDG and JGY. A study of public employment offices

Abstract: This study uses employment office-level panel data to investigate the impact of work-related activities on the outflow from unemployment to work and education. The two largest labor market programs in Sweden are studied: Job and Development Guarantee and Job Guarantee for the Youth. To examine how activity participation affects the outflow to employment/education I had to examine differences between offices (office heterogeneity). This heterogeneity could be differences in local labor market conditions, office’s managerial ability, quality of activities and other features that are non-varying for each individual office. The method to answer the research question is fixed effects distributed lag regression analysis with lagged values of the independent variable “activity participation rate”. In addition to the one-way office-specific fixed effects model, a model with time-specific fixed effects was introduced to check for seasonal impacts and fixed macroeconomic conditions that influence all offices. According to the two-way fixed effects regression results, the seasonal variations seem to have a stronger impact on the outflow to work/education than the work-related activities participation rates. Particularly, when time-specific fixed effects were added to the model with office-specific effects, the overall effect of work-related activities on the outflow rate became statistically non-significant and brought inconclusive results. The results have shown that the month of September has the strongest and most positive influence on the outflow rate as more people find work and leave to education during this month. The months that have the lowest impacts on the dependent variable are March and October, which means that fewer individuals left to work/education during these months across offices, in comparison to other months.