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Getting The Long-Term Unemployed Back to Work

Interventionist government policies for tackling long-term unemployment can significantly reduce the time people spend unemployed. That is the conclusion of Peter Dolton and Donal O''Neil in an analysis of the Restart programme published in a recent issue of the Economic Journal. Examining evidence on nearly 9,000 long-term unemployed people approaching their Restart interview, including a control group who were not called for interview, they found that those excluded experienced a lasting detrimental effect on their probability of leaving unemployment fora job.

Like the more recent Jobseeker's Allowance, the Restart programme aims to provide an additional incentive to the unemployed to seek work and no longer to claim unemployment benefit. After a minimum of six months of registered unemployment, the unemployed are obliged to attend an interview designed to help them find a job and reduce their dependency on benefits. In part this is achieved by placing them in contact with employers and training agencies. But crucially, there is also a negative threat: claimants face the possibility of having their benefits reduced or suspended if they fail to attend the interview or are not deemed to be making genuine efforts to find a job.

Bolton and O''Neill''s study of the Restart programme over an 18 month period found the following
effects:
• The average person who was unemployed for over six months but who did not receive the Restart interview spent around 13 months in unemployment, one month longer than those who had the interview.
• The programme has different effects on the three possible routes out of unemployment: into a job, into a training placement or signing off unemployment benefits. In particular, the interview greatly increases the exit route out of unemployment to signing off, irrespective of when it takes place. This suggests that there is a group of claimants who, if challenged about their availability for work, sign off since they are not really eligible.
• If someone does not have an interview at six months, this has a lasting effect on their employment prospects. The ground lost to those who received an interview at six months is not made up subsequently, suggesting that an interview at 12 months is not an adequate substitute for one six months earlier. A possible explanation for this is that employers look on potential employees who have had 12 months unemployment as significantly less ''employable''.

''Unemployment Duration and the Restart Effect: Some Experimental Evidence''
by Peter Dolton and Donal O''Neill is published in the March 1996 issue of the Economic Journal.
Dolton is Professor of Economics at the University of Newcastle upon Tyne; O''Neill is at
Maynooth College in the Republic of Ireland.