“You reap what you sow”: Do active labour market policies always increase job security? Evidence from the Youth Guarantee

Abstract

The paper uses non-experimental longitudinal data to study the effects of participation in the Youth Guarantee programme aimed at fighting youth inactivity in the European Union territory. Particularly, this analysis questions the value of active labour market policy as a valid instrument to help individuals otherwise isolated from the labour market and, thus, at risk of deterioration of human capital overcome their condition of occupational inactivity. A difference-in-differences model is exploited in this regard to investigate whether there exists an advantage for participants of the Youth Guarantee in terms of employment and job stability. Results show that participants are 7.4 and 4.4 percentage points more likely to, respectively, become employed and be offered an open-ended contract. An assessment of profiling is also provided.