Policies for young adults with reduced work capacity. Labour market impact in Sweden and Norway

The rising numbers of young people with disability pension concerns many advanced economies. We present results from a comparative analysis of the neighbouring countries Sweden and Norway on the impacts of differing policy mixes aimed at enhancing the employability of the work disabled. Using rich longitudinal data, we follow unemployed young adults (ages 25-29) with work-impairment up to four years after they became unemployed to investigate the effect of different types of labour market policies. Our results indicate that, despite differences in programme composition and strategies, there are surprisingly small country differences in treatment effect patterns and signs of estimated impacts. In line with previous studies, we find strong lock-in effects of both workplace-related programmes and training/educational programmes. After participation, workplace-related programmes about double the likelihood of entering regular employment or education. Participating in training courses also increases this likelihood, but effect sizes are smaller.