Michael Lechner (University of St. Gallen)

The Heterogeneous Effects of Active Labour Market Policies in Switzerland

Joint with Evaluation Lab | Fondo per la Repubblica Digitale.

Abstract: The Swiss government annually invests around half a per cent of GDP in active labour market policies (ALMP), despite existing research evaluating their effectiveness and providing mixed empirical evidence. This paper analyses whether four Swiss programmes increase future employment and earnings of the unemployed by using state-of-the-art causal machine learning methods by leveraging a huge administrative dataset. The findings indicate a small positive average effect on both outcomes three years after starting the Wage Subsidies programme, with higher positive effects for individuals with disadvantaged labour market characteristics. Furthermore, shallow policy trees provide practical guidance to policymakers, showing how allocating individuals to programmes could be optimised.