The Threat Effect of Mandatory Programmes in Finland

Abstract

This study focuses on the threat effect of the activation reform of the Finnish labour market support system in 2006. Mandatory programme participation may provide the incentive for some individuals to look for work in order to avoid the training programmes. The study examines whether the reform encouraged individuals in the target group to look for employment. According to the results, mandatory programme participation has no effect on the probability of finding a job or of leaving labour market support for some other reason. Conversely, long-term recipients' participation in the labour market programmes has increased, owing to the activation reform.