The Threat Effect of Active Labor Market Programs: A Systematic Review

This paper is a systematic review of the threat effect of active labor market programs for unemployed individuals. The threat effect is the induced change in the hazard rate of leaving unemployment prior to program participation. Studies included in the review all estimated a threat effect, with the participants in all cases being unemployed individuals in receipt of benefit of some kind during their tenure of unemployment. Seven of these studies have been included in a meta-analysis: The meta-analysis, which has been carried out using a random effects model to account for heterogeneity, indicated a hazard rate of 1.27 for the pooled estimate. It has thus been concluded that active labor market programs constitute a significant threat effect.