What active labour market programmes work for immigrants in Europe? A meta-analysis of the evaluation literature

Abstract

A growing body of programme evaluation literature recognises immigrants as a disadvantaged group in European labour markets and investigates the employment effects of Active Labour Market Programmes (ALMPs) on this subgroup. So far, however, there is no systematic review establishing which ALMPs are effective for immigrants. Using a meta-analysis, we condense 93 estimates from 33 empirical studies of the effectiveness of four types of ALMPs employed across Europe to combat immigrant unemployment: training, job search assistance, wage subsidies and subsidised public sector employment. We find that only wage subsidies can be confidently recommended to European policy-makers.

Jel codes: J15, J61, J68, I38

1 Introduction

Immigrants are under-represented in employment and over-represented in unemployment in most European countries. In 2009/2010, their employment rate was on average 2.9 percentage points lower than that of natives across all European OECD countries. At the same time, their unemployment rate was 4.3 percentage points higher (OECD, [2012]).

To facilitate immigrants’ labour market integration, European governments use a wide range of Active Labour Market Programmes (ALMPs). These include language and introduction courses, job search assistance, training programmes, and subsidised public and private sector employment. They also involve substantial government spending. While evidence on the effectiveness of single programmes exists, it has not been reviewed systematically to establish empirically which types of programmes actually facilitate immigrants’ employment uptake. To shed light on this question, we review the small but growing literature evaluating the employment effects of ALMPs on immigrants in Europe. By means of a meta-analysis, we try to identify which ALMPs work for immigrants and which ones do not. Our results should help policy-makers employ activation measures more efficiently.

With respect to ALMPs’ effects on all unemployed workers (natives and immigrants), recent analyses have strengthened a growing consensus: job search assistance and, to some extent, wage subsidies are effective in the short run, while training works in the longer run; subsidised public sector employment (also known as public works), however, is generally ineffective (Heckman et al. [1999], Greenberg et al. [2003], Kluve, [2010], Card et al. [2010]). Also, the findings of the ALMP evaluation literature on heterogeneous treatment effects on women or young workers have been reviewed (e.g., Bergemann and van den Berg, [2008], Card et al. [2010]).

For immigrants, two surveys of the literature on the effect of ALMPs exist. Nekby ([2008]) provides a qualitative review of four studies evaluating labour market programmes for immigrants in the Nordic countries; she concludes that the same types of ALMPs work for immigrants as for the general population of unemployed workers. Rinne ([2013]) discusses the findings of three studies evaluating language/introduction courses designed for immigrants and eight recent evaluations of general labour market programmes’ effects on immigrants. He suggests that “programs that are relatively closely linked to the labor market (for example, work experience and wage subsidies) appear the comparatively most effective programs” (Rinne, [2013], p. 548). While both surveys present relevant evidence, neither of them considers the full range of existing studies or formally aggregates the findings of the studies reviewed.

We provide an accessible quantitative summary of the existing empirical evidence. To this end, we collect the relevant studies following a search protocol and then condense their findings in two steps: first, using descriptive analysis and second, performing a meta-analysis with sign and significance of the effect estimate as our outcome variable of interest.

As Stanley ([2001]) argues, “The most important strength of meta-analysis is that it moves literature reviews away from casual judgments about “good” studies that deserve attention and “poor” studies that should be set aside, and instead provides a replicable statistical framework for summarizing and interpreting the full range of evidence”. The key ingredient of such an analysis is then an exhaustive data set of relevant studies. We find 33 micro-econometric papers that estimate 93 short-run treatment effects up to two years after programme start. The interventions evaluated were implemented in the Nordic countries (Norway, Sweden, Denmark, and Finland), Germany, the Netherlands and Switzerland between 1984 and 2007.

Our descriptive analysis looks at the distribution of impact estimates conditional on study characteristics in order to provide an absolute indication of the effectiveness of different types of ALMPs. Performing a meta-analysis of the same sample of effect estimates allows us to go beyond the descriptive analysis in two ways. First, we can control for different study characteristics when investigating which ALMP types are associated with significant or insignificant impact findings, simultaneously addressing such issues as methodological differences or changes in programme effectiveness over time. Second, we can provide a summary measure for whether the evidence suggests that one type of ALMP works better than some other.

We find that subsidised employment in the private sector is significantly more likely estimated to have a positive effect on immigrants’ labour market outcomes than training. For the other ALMP types, our meta-analysis yields mostly insignificant results. Combining our conclusions from the meta-analysis with the descriptive analysis suggests that wage subsidies not only work better than other programmes but also do have positive employment effects on immigrants. The finding that only wage subsidies are effective for immigrants is in contrast with recent meta-analyses’ conclusion for the unemployed in general that job search assistance programmes are also effective (Kluve, [2010], Card et al. [2010]). However, it points in the same direction as Rinne’s conclusion that interventions such as work experience and wage subsidy programmes appear most effective (Rinne, [2013]).

Despite the positive effects of wage subsidies, immigrants seem under-represented in this type of programme. For Germany, for example, data on the immigrant share in ALMP participation shows that, compared to natives, immigrants are more often assigned to training and public works programmes than to wage subsidy programmes. In addition, wage subsidy programmes are the smallest category in absolute immigrant participation numbers (Statistik der Bundesagentur für Arbeit, [2013]). In light of our results, these figures suggest that there is room for improving the allocation of ALMP resources.

The remainder of this paper consists of four parts: section 2 provides background information on immigrants in European labour markets; section 3 describes the data and presents some descriptive analysis; section 4 discusses the findings of our meta-analysis and performs a sensitivity check; section 5 concludes.

2 Immigrants in Europe and their labour market integration

On average, the share of immigrants (defined as foreign-born persons) among the total population amounted to 11.2% in European OECD countries in 2009/2010 (see Additional file 1: Table S1).¹ In almost every country, the share of immigrants in the working age population (age 15 to 64) is even larger than in the total population. It amounts to 13.3% on average across European OECD countries.

Despite substantial heterogeneity in immigrant origins, European countries share the problem of integrating immigrants into the labour market. Immigrants are usually under-represented in employment and over-represented in unemployment. Table 1 shows the employment and unemployment rates of immigrants in our sample of seven European OECD countries in 2009/2010 and how they compare to the respective rates of the native populations. On average, the employment rate for immigrants in these countries is 65.8%. It is 9.3 percentage points lower than the rate for natives. Differences in the employment rate are especially pronounced in Denmark, the Netherlands and Sweden, with a difference of more than 10 percentage points. Correspondingly, unemployment is more prevalent among immigrants than among natives. Immigrants’ unemployment rate is 11.6% on average. It is more than twice as high as the natives’ unemployment rate (5.4%). Across all European OECD countries, differences in the employment and unemployment rates between immigrants and natives are smaller than in the seven countries investigated here but still sizeable: 4.3 percentage points for unemployment and 2.9 percentage points for employment.

Table 1 Employment and unemployment rates of immigrants in selected European OECD countries, 2009/2010

To combat the high level of unemployment among immigrants and to foster their employment uptake, governments use Active Labour Market Programmes (ALMPs). For immigrants, two different categories of ALMPs can be distinguished: first, programmes that are specifically designed for and exclusively targeted at immigrants, and second, general programmes that are also used for the native population. In what follows, we will refer to these categories as migrant-specific and general ALMPs, respectively.

General ALMPs comprise four types of interventions (see, e.g., Card et al. [2010]):

• 1) Training: This includes all programmes that aim to enhance participants’ skills needed for employment uptake (e.g., computer courses or courses providing specific occupational knowledge). Training programmes can be provided either on-the-job within a firm or off-the-job in a classroom.

• 2) Subsidised private sector employment: This category comprises programmes that generate incentives to increase job opportunities in the private sector. One example for such a programme is wage subsidies for employers who hire disadvantaged workers. Wage subsidies can also be paid to workers when they accept a job with a wage below their unemployment benefits or when they start their own business.

• 3) Subsidised public sector employment (public works): This type of intervention aims at offering temporary job opportunities outside the private sector, mainly in community services. Public-works programmes should be designed in such a way that they do not crowd out regular employment.

• 4) Job search assistance and sanctions: This intervention type has the objective of making the job search process of participants more effective and efficient. Job search assistance is predominantly provided by public employment services and includes counselling and monitoring of job search efforts. In case of a lack of job search effort, sanctions are intended to restore an appropriate level of compliance.

Migrant-specific programmes can be grouped into three categories:

• 1) Language training often not only improves participants’ ability to communicate in the host country’s main language but also provides information about history, culture and institutions of the host country. One example for such a course is the so-called orientation course in Germany (see, e.g., Liebig, [2007])

• 2) Introduction programmes provide a customised integration plan towards employment uptake. Targeted at newly arriving immigrants, they usually start with language training and continue with either training or subsidised employment. Throughout the programme, job search assistance is provided. See, e.g., Andersson Joona and Nekby ([2012]) and Sarvimäki and Hämäläinen ([2012]) for introduction programmes in Sweden and Finland, respectively.

• 3) General programmes exclusively for immigrants comprise general ALMPs other than language courses (training, subsidised private or public sector employment, job search assistance and sanctions) targeted at immigrants (and not at natives). One example for such an intervention is intensified job search assistance programmes, where immigrants are assigned to caseworkers whose caseload is reduced. That is, caseworkers have more time for the counselling and support of each individual. See, e.g., Aslund and Johansson ([2011]) for a programme of this kind in Sweden.

Whether general programmes or migrant-specific ones are more effective for the integration of immigrants into the labour market is a question of major policy interest. One might expect migrant-specific programmes to be more successful since they were designed for the needs of immigrants, whereas general programmes address the needs of average participants, including mostly natives. However, the fact that, in practice, both programmes coexist in all European countries might be taken to suggest that neither of them is superior or that policymakers are not aware of which programmes work and which ones do not.² Empirical studies have not established an answer to this question either. We attempt to address it by means of our meta-analysis.

3 Description of the data

3.1 Estimation Sample

To obtain an exhaustive sample of studies evaluating the effects of ALMPs on immigrants’ labour market outcomes, we implemented the following search protocol:

• 1) Collect studies on ALMPs surveyed by Nekby ([2008]), Rinne ([2013]), Kluve ([2010]), and Card et al. ([2010]).

• 2) Perform internet keyword searches³ on 27 November 2012 and on 15 April 2013 to find additional studies.

We then identified those studies that met the following selection criteria:

• 1) Studies that estimate ALMP treatment effects for immigrants.⁴

• 2) Studies that perform a micro-econometric evaluation of the intervention’s effect on individual labour market outcomes, outlining the identification strategy.

• 3) Studies that evaluate an intervention that roughly fits into one of four ALMP categories (described in more detail below): training, wage subsidy, public works, or services/sanctions. We also admitted studies that evaluate the aggregate effect of a country’s ALMPs.

Applying these criteria yielded a sample of 34 studies estimating ALMP effects on immigrants’ probability of or hazard to employment⁵ in seven countries (Denmark, Finland, Germany, Netherlands, Norway, Sweden, Switzerland). Some studies evaluate several programmes or perform their analyses separately by gender or region as well as estimate effects for different points in time during follow-up. For comparability, we focus on short-run estimates, defined as effect estimates based on outcomes observed up to two years after programme start.⁶ Where there is more than one such short-term estimate per gender-region-group combination, we choose the latest (most long-term) one. This gives 33 studies providing 93 short-run estimates.⁷

The four ALMP categories we use are as follows:

• 1) Classroom and on-the-job training (henceforth “training”)

• 2) Subsidised private sector employment (“wage subsidy”)

• 3) Subsidised public sector employment (“public works”)

• 4) Job-search assistance and sanctions (“services/sanctions”)

These are taken from Card et al. ([2010]) but are fairly standard in the evaluation literature, as exemplified by analogous definitions in Calmfors ([1994]) and Kluve ([2010]). We allow for a fifth residual group of “other programmes” (including aggregate ALMP effects and programmes that combine several ALMP types in a single treatment). See section 2 for a definition of the ALMP categories.⁸

From our sample of 33 studies, we extracted information about the programme evaluated and its geographic and chronological setting, the sample studied and the methods applied. We recorded programme type, duration and whether it was designed specifically for immigrants in order to characterise the nature of the treatment. To capture sample characteristics, we included information on whether an effect was estimated for males, females or a mixed group of participants as well as in what country and decade they received the treatment. As methodological proxies, we documented the econometric technique used⁹ and whether the estimates came from a published paper or a working paper.¹⁰

While the control variables applied by the 33 studies vary according to data sources, there is a set of basic controls common to virtually all the evaluation studies considered. These include demographic information such as age, sex, family status and household characteristics and country/region of origin where available. In addition, socioeconomic characteristics are controlled for at varying levels of detail, using information on human capital, labour market history and the place/region of residence and its labour market.

3.2 Summary statistics

The first column of Table 2 summarises the distribution of the short-run estimates we focus on. First, consider the outcome variable: those evaluations finding no effect are most frequent (48 estimates), followed by ones finding significantly positive effects (32), with significantly negative effect estimates less frequent still (13 estimates).

Table 2 Characteristics of the estimation sample

Next, lines 2a) to 2e) show that among ALMP types, training programmes dominate (30 estimates). Public works also feature prominently, contributing 23 data points; the third column reveals that this pattern is driven by evaluations for Germany. Wage-subsidy (16) and services/sanctions (17) each provide about half as many observations as the largest category. There are seven estimates in the residual category (other programmes). Only six of our 93 estimates are for migrant-specific programmes, whereas 87 are for general ones (see lines 2f) and 2g), respectively).

Lines 3a) through 3c) show that 25 estimates are for programmes with a duration of up to four months, while 20 effects are estimated for programmes of at least five months. However, most short-run estimates are for programmes of unknown or mixed duration (48), reflecting some heterogeneity in the level of detail on interventions given in the papers. Lines 4a) through 4c) reveal that about two thirds of estimates are from the 2000s. Next, lines 5a) through 5c) illustrate that matching approaches were the most popular method (55 estimates). From column 3, it is clear that German estimates, based on matching procedures (with only one exception), account for this distribution. Finally, lines 6a) and 6b) demonstrate that less than a third of the short-run estimates came from published papers (28), with Nordic evaluations accounting for disproportionately many of the publications (20).¹¹

Comparing estimates by origin reveals that the largest contributor, Germany, differs markedly from Denmark, Finland, Norway and Sweden (Nordic countries) and Switzerland and the Netherlands (other countries). Nordic estimates are relatively optimistic about programme effects, while most German estimates are insignificant, and effects tend to be more often negative in the other countries. There is more variety in the methods used to evaluate Nordic and Swiss/Dutch programmes than for German programmes. While training is the ALMP type evaluated most frequently in the Nordic countries and Switzerland/Netherlands, evaluations of public works dominate in Germany.

3.3 Descriptive analysis

In this subsection, we present the distribution of the outcome variable (short-run effect: significantly negative, insignificant or significantly positive) conditional on the covariates we extracted from the studies (see Table 3). This serves a dual purpose: one is to provide a flavour of the potential results of the meta-analysis; another is to give some absolute indications of the effectiveness of the programme types evaluated. This is important because our meta-analysis, by virtue of its method, only allows conclusions about the relative effectiveness of different types of programmes.

Table 3 Distribution of the estimated programme effects in the estimation sample

Lines 1a) to 1e) of Table 3 show that insignificant estimates are the largest category in all types of ALMP except for wage subsidies, where 10 out of 16 estimates are positive. For training and services/sanctions, about half of the estimates are insignificant, while for public works, about two thirds are insignificant. For both training and services/sanctions, positive estimates are more frequent than negative ones, while the converse is true for public works. These raw descriptive statistics indicate that wage subsidies seem to have positive employment effects; for the remaining ALMP categories, the evidence mostly points to an employment effect too close to zero to be significant. Because only six of the 93 estimates are for migrant-specific programmes (see lines 1f) and 1g), respectively), it is hard to draw reliable conclusions about their relative effectiveness. We effectively focus on the effect of general ALMPs on immigrants.

The next three lines, 2a) to 2c), seem to suggest that duration analysis is more optimistic about programme effectiveness than matching approaches are. Similarly, lines 3a) to 3c) may point to a deterioration of ALMP quality over time from the 1980s to the 2000s. While programme duration is unknown in most cases, short programmes may have been more effective than longer ones. Finally, published papers seem to find positive effects in a higher fraction of cases. Yet, regional and chronological differences may be confounding all of these potential relationships; multivariate analysis will help disentangle these effects.

4 Empirical analysis

4.1 Method

We perform an ordered probit analysis with sign and significance of the estimate as the outcome variable. This variable can take three values: −1 for significantly negative estimates, 0 for estimates insignificantly different from zero, and +1 for significantly positive estimates. The explanatory variables of interest are dummies describing the type of ALMP. In addition, we include a number of variables to account for differences in evaluation technique and setting. We focus on the relationship between ALMP type and sign/significance of the short-run effect estimated for each study-gender-region cell.

The index model underlying our estimation is as follows:

$$y_i^{*}={\alpha }_{1}W{S}_i+{\alpha }_{2}P{W}_i+{\alpha }_{3}S{E}_i+{\alpha }_{4}O{T}_i+X_i^{\text{'}}\beta +u_i\text{,}$$

where WS, PW, SE and OT are dummy variables describing the programme type analysed in study i(wage subsidy, public works, services/sanctions, or other programmes, with training being the omitted category), X is a vector of control variables (study characteristics, programme characteristics, sample characteristics, contextual controls), and u is an error term.

Taking into account the degrees of freedom underlying each effect estimate as well as a measure of effect size (such as a t-statistic) would be an attractive alternative to the sign/significance approach we take (see, e.g., Greenberg et al. [2003], and Stanley, [2005]). It would allow us to identify systematic differences in estimated effect size across types of programme, unconfounded by differences in precision. However, the plurality of the underlying econometric estimation techniques makes this unfeasible.¹²

Card et al. ([2010]) show that the approach we follow would be invalid if the pattern of estimate sign and significance were generated by differences in precision rather than differences in effect size. They also demonstrate that the sign/significance approach is approximately valid when the effective sample size is constant, i.e., when larger samples are offset by more demanding designs. They present evidence that this is the case in their sample of studies and indeed find that the sign/significance approach and an effect size-based analysis on a subsample of studies that use the probability of employment as the outcome variable yield similar results. While we cannot perform such a check for our smaller set of studies, we can partly rely on their findings in that there is some overlap between our samples of evaluation studies.

Recent theoretical work on meta-analyses has stressed the importance of checking for publication bias (see, e.g., Stanley, [2005]). We cannot rule out publication bias as the test statistics of the studies we analyse are not directly comparable. In this paper, however, our focus is the relative effectiveness of different types of ALMPs. As long as the presence of publication bias does not interact with the type of programme evaluated, it will not distort our findings on the relative effectiveness of different types of ALMPs.

4.2 Estimation results

We estimate six specifications of the ordered probit model outlined above, gradually introducing groups of control variables. Specification 1 includes only the type of programme, omitting training. Specification 2 adds study characteristics: whether the study employed duration analysis or some other econometric technique (omitted: matching), and whether the paper is published (baseline: working paper). Specification 3 introduces programme characteristics, namely whether the intervention was designed for immigrants and whether the treatment was short, that is, no longer than four months. In specification 4, sample characteristics enter the equation: participant gender (baseline: pooled estimation for men and women) and treatment in the 2000s (omitted: 1980s or 1990s). Specification 5 adds the unemployment rate in the year that the evaluated programme started as a proxy for the macroeconomic context. Alternatively, specification 6 uses GDP growth as a contextual control.¹³

Table 4 presents the results. In specification 1, which includes only programme type, we obtain positive coefficients for wage subsidy and services/sanctions. The interpretation for these positive coefficients is that studies evaluating wage subsidies and services/sanctions are more likely to find positive employment effects than studies evaluating training. However, the estimated coefficients are not statistically significant. The coefficients on public works and other programmes are negative, though only the coefficient for other programmes is marginally significant. There is no meaningful interpretation for the coefficient on “other programmes” as this is a residual category.

Table 4 Estimation results

When including study characteristics (method and publication status) in specification 2, the results remain very similar. None of the ALMP types are significant except for the residual category. Specification 3’s programme features cause the wage subsidy coefficient to grow and become significant; all other ALMP type coefficients remain insignificant. Including information about the sample on the right-hand side in specification 4 does little to wage subsidy (still significant) and public works or services/sanctions (still insignificant). When we add contextual control variables in specification 5 (unemployment rate) and 6 (GDP growth rate), the coefficient on wage subsidy remains positive and significant. The parameter estimates on public works and services/sanctions are still insignificant.

Based on the Akaike information criterion, we choose specification 5 as our preferred one. Specification 5 contains the national unemployment rate at programme start as a contextual control variable. The coefficient on the unemployment rate is positive and significant, suggesting that inferior macroeconomic conditions at the time of treatment are associated with a higher probability of a positive evaluation result.¹⁴

Almost all other control variables in specification 5 (and across the other specifications) have insignificant coefficient estimates. Exceptions are the dummy for short programme (which is always marginally significant and positive) and the dummy for published paper (which is positive and at least marginally significant in most specifications). The dummy for migrant-specific programmes is insignificant. While this implies that these programmes are equally (in)effective as general ones, this result has to be interpreted with caution as the number of studies analysing migrant-specific programmes is small.

It is worth re-iterating that our ordered probit analysis only permits relative, not absolute, conclusions on the effectiveness of ALMP types. Thus, our meta-analysis suggests that wage subsidies work better than training. Because the corresponding coefficients are insignificant, we cannot claim with confidence that public works are less effective than training or that services/sanctions are more effective, even though coefficient signs consistently point in that direction.

Combining our conclusions from the meta-analysis with the descriptive analysis in section 3 suggests that wage subsidies not only work better than other programmes but also do have positive employment effects on immigrants. The descriptive results appear most pessimistic about public works, as do the meta-analytic results (albeit insignificant), suggesting at the least that this type of programme should be used very selectively. Insignificant programme estimates dominate the descriptive analysis of training and job search assistance. No firm conclusions can be drawn on the suitability of these activation measures for immigrants in the short run. Additional research on the longer-run employment effects may help clarify the picture.

Our findings are based on a smaller sample of studies and on a more specific group of programme participants than the meta-analyses of Kluve ([2010]) and Card et al. ([2010]) but point in a similar direction. Moreover, they are in line with the conclusions that Nekby ([2008]) and Rinne ([2013]) arrived at in their qualitative reviews.

In parts of Europe at least, actual labour market policy seems to diverge from the allocation implied by our results. In Germany, the smallest ALMP category among immigrants is wage subsidies: less than 10 percent of immigrants in ALMPs participate in this type of programme. Moreover, when comparing them to natives, immigrants are more often assigned to training, public works and job search assistance programmes than to wage subsidy programmes. In 2012, the immigrant share among wage subsidy participants was 12.0% as compared to 13.7% for public works, 17.7% for training and 12.4% for job search assistance (excluding sanctions) participants. For earlier years, the figures are similar or more heavily skewed towards training and public works (Statistik der Bundesagentur für Arbeit, [2013]).¹⁵

4.3 Robustness analysis

To address the potential criticism that our criteria for the selection of studies (see section 3.1) were to some extent arbitrary, we vary these criteria and re-estimate our preferred specification on the sample of estimates this gives. This provides a simple check on the robustness of our results. Our variation is to tighten the definitions of ALMPs and of the short run.

First, we drop estimates for programmes that, strictly speaking, are not ALMPs. That is, we exclude evaluation studies of temporary agency work, which, like wage subsidy programmes, make hiring cheaper and may facilitate employer-worker matching, and exclude transfer reduction programmes, which work much like sanctions. Moreover, we exclude evaluations of aggregate ALMP effects. Second, we define the short run as up to twelve months after programme start rather than 24 months.

This gives an alternative sample of 86 estimates from 27 studies. As Table 5 illustrates, our variation results in a very similar pattern of coefficient estimates, providing evidence for the robustness of our findings (see Additional file 1: Table S2 for the full results). In the additional file, we also include the results of both main and robustness analysis when standard errors are clustered at the study level¹⁶. As Additional file 1: Table S3 and Table S4 illustrate, these are practically the same as those presented in the main text.

Table 5 Sensitivity analysis

5 Conclusion

Immigrants constitute an important group in European labour markets in terms of both the risks they face and the potential they harbour: they are numerous and over-represented in unemployment on the one hand but younger than the native population on the other. This highlights the importance of immigrants’ labour market integration. While the full range of ALMPs is used in practice, there is little empirical guidance for policy-makers seeking to facilitate immigrants’ employment take-up. In other words, there is not yet a clear indication of what programmes work for immigrants.

To answer this question, we provide a quantitative synthesis of the evidence on ALMPs’ effect on immigrants. Using 93 effect estimates extracted from 33 relevant evaluation studies, we perform a meta-analysis of the evaluation results. An ordered probit analysis based on sign and significance of short-run effect estimates suggests that wage subsidies work better for immigrants than training programmes. Public works may be less effective than trainings while job search assistance programmes (services/sanctions) may be more effective but estimated coefficients are insignificant. To help interpret these relative statements, we present a detailed descriptive analysis: we find effect estimates for wage subsidy programmes are mostly positive, suggesting that wage subsidies are indeed a promising measure to increase employment rates of immigrants. They should be used more often than public works, which reduce employment chances or result in insignificant employment effects at best. The short-run effects of services/sanctions on employment prospects are mostly insignificant. The same is true for training.

At this point, only wage subsidies can be confidently recommended to policymakers using general ALMPs to improve immigrants’ labour market integration. An example for an immediate policy implication of our results is in Germany, where wage subsidy programmes are rarely used for immigrants. Moreover, they are used more scarcely for immigrants than for natives, while our results (combined with the findings of recent meta-analyses of the effect of ALMPs on unemployed workers in general) suggest they should be used at least as often for immigrants as for natives.

Further research should aim to clarify why no significant effects of the other types of programmes have been found. Furthermore, migrant-specific interventions such as language courses and introduction programmes, on which the evidence is still scarce, may be promising; further research in this area is warranted as well.

Endnotes

¹Note that this figure includes only the first generation of immigrants. Unfortunately, comparable data on immigrants across European countries including the second or third generation are not available.

²If the migrant-specific programmes were successful in integrating all newly-arriving immigrants into the labour market and into stable jobs, there would not be any need for participation in general ALMPs later on.

³Keywords, in different combinations, include: ALMP, labour market programmes, labor market programs, migrants, foreign, native, born, citizen, subgroup, sub-group, hetero; search engines used: Google Scholar, EconPapers and Econis.

⁴The definition of immigrants varies across studies. It usually means those with foreign citizenship, the foreign-born or individuals whose parents or grandparents were foreign-born. Most studies estimate heterogeneous ALMP treatment effects for several subgroups, one of them is immigrants. A few studies have a sample of only immigrants.

⁵When looking at employment, one study considers earnings. Another, evaluating the promotion of self-employment, uses yet a different outcome variable: neither unemployed nor in receipt of unemployment benefits.

⁶While we do have information on longer-run outcomes (38 estimates), there is not enough variation in them to permit a separate econometric analysis. One study reports only long-term estimates for 36 and 50 months after the programme (Groß V, Rothgang M, Schumacher M: A comprehensive evaluation of ESF financed labour market policy in Germany, unpublished). This study is dropped from the analysis.

⁷See the references section for the list of the 33 studies analysed.

⁸Since only 6 out of the 33 studies analyse migrant-specific programmes, our econometric analysis cannot differentiate between these types of ALMPs, as outlined in section 2. Instead, we define a dummy variable to indicate whether a programme is migrant-specific or general. We then classify migrant-specific programmes as training, wage subsidy, public works, services/sanctions or other programme, depending on their content.

⁹We distinguish identification strategies based on matching, instrumental variables and duration-analysis. All duration-analysis studies are identified, applying the timing-of-events approach or variants thereof.

¹⁰We categorised PhD dissertations as published studies because of the similarities between PhD supervision and the referee process.

¹¹We do not intend to suggest that published papers meet different quality standards than working papers, given that we are agnostic about the relative quality of the various refereed journals and opt for estimates from working papers in some cases where the published version no longer presents all heterogeneous effect estimates, e.g., Gerfin and Lechner ([2000]).

¹²It is not straightforward how test statistics from different types of models can be transformed into a common distribution so that the test statistics can be compared directly. For instance, test statistics from a duration model and a matching model will have different distributions (and degrees of freedom).

¹³Unemployment rates and GDP growth rates were obtained from the Online OECD Employment database; see http://www.oecd.org/employment/employmentpoliciesanddata/onlineoecdemploymentdatabase.htm (accessed on 7 January, 2013).

¹⁴This result is in line with the findings of Lechner and Wunsch ([2009]), who show a positive correlation of the unemployment rate at the start of the programme with the effectiveness of training programmes in Germany.

¹⁵Statistik der Bundesagentur für Arbeit ([2013]) defines immigrants as foreigners, naturalised citizens and ethnic German resettlers.

¹⁶ Several studies present estimates for the effects of multiple programmes. These estimates are based on different samples of people though. This is why we regard the estimates as independent. It may be argued that author’s individual research strategies introduce correlation between multiple estimates of one study – in which case clustering at the study level would be appropriate.

Studies used in meta-analysis

Ahmad, Nisar and Michael Svarer (2010): “The Effect of Sanctions and Active Labour Market Programmes on the Exit Rate from Unemployment”. Working paper.

Aldashev, Alisher, Stephan L. Thomsen and Thomas Walter (2010): “Short-term training programs for immigrants in welfare: Do effects differ from natives and why?” ZEW Discussion Paper 10-027.

Andersson Joona, Pernilla and Lena Nekby (2012): “Intensive coaching of new immigrants: an evaluation based on random program assignment”. Scandinavian Journal of Economics 114(2), 575-600.

Andrén, Thomas and Daniela Andrén (2006): “Assessing the employment effects of vocational training using a one-factor model”. Applied Economics, 38, 2469-2486.

Andrén, Thomas and Björn Gustafsson (2004): “Income effects from labor market training programs in Sweden during the 1980s and 1990s”. International Journal of Manpower, 25, 8, 688-713.

Aslund, Olof and Per Johansson (2011): “Virtues of SIN: Can intensified public efforts help disadvantaged immigrants?” Evaluation Review 35(4), 399-427.

Bernhard, Sarah, Hermann Gartner and Gesine Stephan (2008): “Wage subsidies for needy job-seekers and their effect on individual labour market outcomes after the German reforms”. IAB Discussion Paper 21/2008.

Bernhard, Sarah and Thomas Kruppe (2012): “Effectiveness of further vocational training in Germany”. IAB Discussion Paper 10/2012.

Bernhard, Sarah and Joachim Wolff (2008): “Contracting out placement services in Germany”. IAB Discussion Paper 5/2008.

Caliendo, Marco and Steffen Künn (2010): Start-up subsidies for the unemployed: long-term evidence and effect heterogeneity”. IZA Discussion Paper No. 4790.

Clausen, Jens, Eskil Heinesen, Jans Hummelgaard, Leif Husted and Michael Rosholm (2009): “The effect of integration policies on the time until regular employment of newly arrived immigrants: Evidence from Denmark”. Labour Economics 16, 409-417

Delander, Lennart, Mats Hammarstedt, Jonas Mansson and Erik Nyberg (2005): “Integration of immigrants: The role of language proficiency and experience”. Evaluation Review 29/1, 24-41.

Gerfin, Michael and Michael Lechner (2000): “Microeconometric evaluation of the Active Labour Market Policy in Switzerland”. IZA Discussion Paper No. 154.

Hartig, Martina, Eva Jozwiak und Joachim Wolff (2008): “ Trainingsmaßnahmen: Für welche unter 25-jährigen Arbeitslosengeld II-Empfänger erhöhen sie die Beschäftigungschancen?” IAB-Forschungsbericht 6/2008.

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Hohmeyer, Katrin and Joachim Wolff (2007): A fistful of Euros. Does one-euro-job participation lead means-tested benefit recipients into regular jobs and out of unemployment benefit II receipt?” IAB Discussion Paper 32/2007.

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Jahn, Elke and Michael Rosholm (2012): “Is Temporary Agency Employment a Stepping Stone for Immigrants?” IZA discussion paper no. 6405

Kjaersgaard, Lene and Eskil Heinesen (2012): “Effects of consecutive Active Labor Market Programs – evidence from immigrants in Denmark”. Ph.D. Dissertation.

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Richardson, Katarina and Gerard J. van den Berg (2008): “Duration dependence versus unobserved heterogeneity in treatment effects: Swedish labor market training and the transition rate to employment.” IFAU Working Paper 2008:7.

Ronsen, Marit and Torbjorn Skardhamar (2009): “Do welfare-to-work initiatives work? Evidence from an activation programme targeted at social assistance recipients in Norway”. Journal of European Social Policy 19, 61-77

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Sarvimäki, Matti and Kari Hämäläinen (2012): “Assimilating immigrants. The impact of an integration program”. Updated version of HECER Discussion Paper No. 306.

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