Can supporting workplace insertions of unemployed recent graduates improve their long-term employability?

This paper contributes to the literature with evidence on the effectiveness of a particular active labour market policy programme, whose traditional design allows international comparisons within the family of programmes facilitating workplace insertions of the unemployed youth. Available evidence on the effectiveness of comparable programmes throughout the world is not consensual. We argue and show that it is crucial to inspect the long-term effects of participation in the funded trainee schemes. We demonstrate this by exploring the treatment effects in the case of the most popular active labour market policy programme targeting the unemployed youth in Slovakia. The empirical analysis is based on a detailed administrative dataset applying three alternative methodological approaches: propensity score matching, inverse probability weighting, and two-stage least squares estimations using an instrumental variable. The results of the empirical analysis show that participation in the programme increases the employment chances of participants during the post-participation period. Yielded estimations are consistent across all three applied methodological approaches. Estimated positive, and statistically significant, employment effects increase 30 months following participation. The positive employment effect is in contrast to a negative income effect on employed participants. The potential association between the increase in the measured effects and the hit of the economic crisis is further explored.