The wage effect of a social experiment on intensified active labor market policies

This study paper investigates the effect of Denmark's intensified 'active labor market policies, ' which is increasing the threat of program participation on post-unemployment wages. For this purpose, the paper examines a social experiment conducted in two Danish counties where approximately 5,000 unemployed people were randomly selected to receive either a standard treatment or an intensified treatment. It uses a Heckman selection model and finds that an intensified threat of program participation increases the probability of finding a job in the short run, but decreases wages in the same period. (Series: The Rockwool Foundation Research Unit - Study Paper - Vol. 49