Healing or Deepening the Scars of Unemployment? The Impact of Activation Policies on Unemployed Workers

Abstract

Unemployment has severe consequences that persist over the life course, including higher risk of future unemployment and worse employment conditions. While the existence of scarring effects has become conventional wisdom, labour market sociologists have pointed out that their magnitude differs between institutional contexts. Recently, the focus of the discussion has shifted towards the role of activation policies, which are suspected to speed up labour market integration but worsen reemployment quality, hereby deepening the scarring effects of unemployment. To contribute to this discussion, this article provides an analysis of the impact of a large-scale counselling and monitoring scheme on unemployed workers by means of matching/weighting analyses. In contrast to sanctions, the counselling and monitoring programme fosters labour market integration without impairing job quality. Apparently, activation programmes pose a danger of impairing job quality, but this negative effect can be avoided for programmes based on more emphatic governance principles.