The Effects of a Job Creation Scheme: evidence from Regional Variation in Programme Capacities

In direct job creation schemes, unemployed individuals at risk of permanent labour market exclusion are offered temporary subsidised employment in public or non-profit sector firms in combination with skills training and socio-pedagogical support. The main aim is to stabilise and qualify them for later reintegration into the regular labour market. Exploiting exogenous regional variation in population-groupspecific programme capacities, I find evidence that such a job creation scheme is, on average, effective in providing a bridge to a regular job. The achieved integration is, however, often not stable. Successful participants face a high risk of once again becoming unemployed.