Summarising the empirical evidence

Furthermore, it seems that the compulsoiy element of activation might be responsible for the short-run effects whereas the treatment component of counselling and other supportive measures may account for the long-run impact of programmes. Evidence is less robust with regard to variations across particular target groups. 

However, all reviewed studies fit into the strand of literature that suggests that the effectiveness of the activation programmes is driven more by the stick than by the carrot element - a general observation that, in turn, has contributed to the re-design of policy reforms in many countries. 

Given displacement, substitution, deadweight, wage and fiscal effects, the macro-economic effectiveness and efficiency of active labour market policy programmes as well as the sustainability of effects is less clear. In particular, some studies point at the fact that activating interventions based on the threat potential and demanding principle may help move benefit recipients to low-skill, low-pay and instable jobs so that they ran the risk of continued partial reliance or repeated return to benefits. 

There is no clear evidence that activation as such necessarily leads to lower overall benefit dependency and pubhc expenditure. Activation, therefore, is neither cheap nor easy - and it may not be the silver bullet to ease fiscal pressures on the welfare state by increasing overall employment and reducing benefit expenditure. 

However, we do not know what would have happened without activation. There may be indirect positive effects of activation on overall employment which are hard to identify. First, activation may have slowed down increases in benefit dependency. Second, activation as a credible threat tends to lower reservation wages not only of the unemployed but also of wider groups of the labour force, which can stimulate labour demand and facilitate faster matching on the labour market. 

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