The effect of temporary in-work support on employment retention: Evidence from a field experiment

A recent experimental programme for unemployed welfare recipients in the UK found that temporary earnings supplements combined with post-employment services led to a sustained rise in employment. This paper examines whether this was due to increases in employment entry or to reductions in employment exit. Using a hazard rate model, we find a significant effect on initial employment entry but not on subsequent transitions. The results also show that the length of a completed unemployment spell has a negative effect on the hazard of exit from the next unemployment spell. While the direct effect of the programme is to shorten the initial unemployment spell, an indirect effect arises due to this lagged duration dependence.