Employment effects of active labor market programs for sick-listed workers

We use register data of 88,948 sick-listed workers in Denmark over the period 2008-2011 to investigate the effect of active labor market programs on the duration until returning to non-subsidized employment and the duration of this employment. To identify causal treatment effects, we exploit over-time variation in the use of active labor market programs in 98 job centers and time-to- event. We find that ordinary education and subsidized job training have significant positive employment effects. Subsidized job training has a large, positive effect on the transition into employment but no effect on the subsequent employment duration. In contrast, ordinary education has a positive effect on employment duration but no effect on the transition into employment. The latter effect is the result of two opposing effects, a large positive effect of having completed education and a large negative lock-in effect, with low re-employment chances during program participation.