What Works for Active Labor Market Policies? A Meta-Analysis of RCT Findings

Abstract

The past 10 years have witnessed a flurry of Randomized Controlled Trials (RCTs) that shed new light on the impact and cost-effectiveness of Active Labor Market Policies (ALMPs) that aim to improve workers´ access to new jobs and better wages. This paper presents the first systematic review of 102 ALMP RCTs comprising a total of 668 estimated impacts. We find that (i) a third of these estimates are positive and statistically significant (PSS) at conventional levels; (ii) programs are more likely to yield positive results when GDP growth is higher and unemployment is lower; (iii) programs aimed at building human capital, such as vocational training, independent worker assistance and wage subsidies, show significant positive impact; and (iv) program length, monetary incentives, individualized follow up and activity targeting are all key features in determining the effectiveness of the interventions