In this paper, we perform a counterfactual evaluation of a publicly funded short-term hiring subsidy designed for young jobseekers in Hungary: namely, the 90-day job trial programme, which was introduced in 2015 a part of the Youth Guarantee scheme. The analysis is based on a linked administrative dataset of PES registers and social security records. We rely on propensity score matching for causal inference and compare job trial participants and participants in public works and classroom training programmes. Our estimates indicate that compared to participation in the public works programme, participation in the 90-day job trial improved employment prospects of young people on the horizon of six months: job trial participants spent 14-22 days more in employment within six months after the programme ended, the probability of being employed is higher by 4-7.7% six months after the programme on the whole sample. The difference is lower compared to the training participants: job trial participants spent 7.5-12 days more in employment status. The individuals who participated in the job trial were probably among the most employable young jobseekers: compared to members of the control groups, they had higher levels of education, lived in more developed regions, spent less time in the NEET (not in employment, education, or training) status, and had more work experience. These findings suggest that the programme did not reach those who needed help the most. We complement this analysis with a preliminary evaluation of the whole Youth Guarantee programme. We use an alternative identification strategy by exploiting the fact that in the Central Hungarian region, the programme started nine months later than in other parts of the country for administrative reasons. We apply a difference-in-differences framework to estimate the effect of the Youth Guarantee on eligible jobseekers’ outcomes, and find a modest positive effect on employment in the 7-12 months after entering the register.
keywords: labour market policy evaluation
thematic categories: policy evaluation
publication number: 04/2021
additional information: We are grateful for Asdrid Kunze and Jan Gromadzki for their highly valuable detailed comments, and to the members of the Youth Employment Partnership for their continuous feedback and discussions throughout the research. We are also highly indebted to the owner of our administrative database, the Databank of the Centre for Economic and Regional Studies, for providing access to and help with the dataset. The would like to thank István Boza for his help in preparing and cleaning the dataset. The settlement level variables used in the analysis are derived from the settlement level unemployment databased, build up in the project “Mobility Research Centre”(KEP-4/2019) under the “Support for excellence grant programmes” of the Hungarian Academy of Science. We are grateful to György Molnár for providing access to these variables. We are grateful for József Tajti for his help with the data. We are thankful to Ildikó Tamási and Norbert Putz for their insights into the Youth Guarantee programmes. All remaining errors are of our own.