Does secondary labour market improve the individual quality of life?

Avilés, Gregorio (2016) Does secondary labour market improve the individual quality of life? In: Economics, Health and Happiness, 14-16 January 2016, Lugano. (Submitted)

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Background: In the context of the active welfare state, one widespread idea is to promote the reintegration of the “hard-to-place” unemployed through various forms of subsidized work, either in the ordinary market, or in the secondary labour market. The latter has developed thanks to the joint initiative of public administrations and private non-profit organizations. So far, the scientific evaluation of activation policies has focused primarily on the employment outcomes of the secondary market. Little is known about its social effectiveness, which is nevertheless of crucial interest, most of all with regard to the most fragile unemployed. Aim: To evaluate the impact of secondary labour market on the individual quality of life. Design: This study draws on three waves of observational data coming from a panel of 110 social assistance recipients in Canton Ticino (southern Switzerland), who were either participating or eligible for participation in a secondary market program. Measures: We measured three indicators of psychological well-being, i.e. life satisfaction, a 5-item version of the Rosenberg self-esteem scale and the Sf-12v2 mental component score. Physical well-being was measured with the Sf-12v2 physical component score. We also recorded an indicator of social well-being, namely perceived social support. Finally, two measures of material well-being were collected, i.e. financial satisfaction and financial strain. Method: The analysis were carried out by means of “hybrid” random effects linear regression models, using the so-called “within-between” estimator. Results: Due to lack of experimental data and low power, results are mainly suggestive. On the one hand, the secondary labour market appears to produce a positive average effect on the psychological and the financial dimensions of well-being. Nevertheless, the effectiveness of regular employment is larger. On the other hand, the impacts of both secondary market and paid employment on the physical and social well-being seem to be negative. Policy-makers should improve the employment outcomes of programs and further the creation of real jobs on the subsidised labour market for the more disadvantaged people. By means of a moderation analysis, the study also provides evidence concerning the heterogeneity of the secondary labour market impacts.

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