Costs and benefits of Danish active labour market programmes

Since 1994, unemployed workers in the Danish labour market have participated in active labour market programmes on a large scale. This paper contributes with an assessment of costs and benefits of these programmes. Long-term treatment effects are estimated on a very detailed administrative dataset by propensity score matching. For the years 1995 – 2005 it is found that private job training programmes have substantial positive employment and earnings effects, but also public job training ends up with positive earnings effects. Classroom training does not significantly improve employment or earnings prospects in the long run. When the cost side is taken into account, private and public job training still come out with surplusses, while classroom training leads to a deficit.