Unemployment in Europe, particularly among young people, has risen dramatically during the Great Recession. This has put a lot of pressure on job center employees and their clients, with instances of violent attacks making headlines. We wanted to know how well the case-worker approach works when compared to other active labor market policies. IZA fellow Michael Rosholm (Aarhus University), an expert on youth unemployment and active labor market policies, answered our questions. He recently authored an IZA World of Labor article on case workers.
Case workers in job centers are not immensely popular among the unemployed, especially when it comes to sanctions. How successful are they really at bringing people back into employment?
Michael Rosholm: Well, quite successful in fact. There is quite a bit of evidence suggesting that when case workers attend meetings with unemployed workers, they tend to find jobs faster. This is probably due to the fact that the unemployed are often inexperienced at job search, since, fortunately, it is typically not an event occurring often in a person’s labor market career. Therefore, they can use all the job search assistance they can get from the case workers. Case workers can provide information on the state of various segments of the labor market, point to specific jobs even, and provide general advice on effective methods of job search.
Another reason might be more of the ‘stick’ type. We know from behavioral economics that we tend to procrastinate and to prefer today over tomorrow, and therefore we may take a few days (or weeks) off, when becoming unemployed (especially if UI benefits are available). But this is crucial, since job search is exactly most effective during the early parts of an unemployment period, so early meetings with case workers with a monitoring aspect might reduce the tendency to conduct less than optimal job search in the early phases of unemployment.
How does the case worker approach compare with traditional active labor market policies? What is your recommendation to policymakers?
Michael Rosholm: We have observed that often traditional active policy instruments are not terribly effective, and some of them tend to be quite expensive. Frequent meetings with case workers could in some cases be a cost effective alternative to the traditional instruments, exactly because these meetings address directly the job search process.
Prevention is certainly better than just treating symptoms. Given the recent rise in youth unemployment across Europe, what can be done to prevent a “lost generation”?
Michael Rosholm: This is an extremely complex issue, and to some extent it may even be too late for prevention. Certainly, establishing ways to include youth into the ordinary labor market through more flexibility is an important policy in most countries. In Denmark, where the labor market is quite flexible, youth unemployment rates are remarkably low. Hence, policies aiming at introducing easier access to ordinary jobs are crucial, and of course, educational policies aimed at maintaining the skills of the young individuals who find themselves at risk of exclusion.
As director of the newly established TrygFonden’s Centre for Child Research you aim at “integrating evidence into policies that improve the wellbeing of children and youth”. Is the idea of your research activities to improve children’s future labor market prospects?
Michael Rosholm: The idea is to provide knowledge about the effectiveness of interventions aimed at children and youth, whether they are aimed at improving the vocabulary of toddlers, improving math skills in primary school, reducing crime rates among disadvantaged youth, reducing dropout rates from the educational system, or indeed improve their future labor market prospects. Overall, the aim of our research is to assist policy makers in providing policies promoting equal opportunities for all children and youth. I guess the shorter answer to your question would be ‘yes’!
Thank you very much!
Editor’s note: Michael Rosholm has been newly appointed as Subject Editor for Program Evaluation at IZA World of Labor. With his broad research agenda, including topical issues like active labor market policies, immigration and youth development, he will certainly contribute to the success of IZA World of Labor. We also thank his predecessor Jan van Ours for his excellent job in this capacity.