Taking a Chance on Workers: Evidence on the Effects and Mechanisms of Subsidized Employment from an RCT

This paper estimates experimental impacts of a supported work program on employment, earnings, benefit receipt, and other outcomes over a four-year follow-up period.

Case managers addressed employment barriers and provided targeted financial assistance while participants were eligible for 30 weeks of fully subsidized employment. Program access increased employment rates by 21 percent and earnings by 16 percent while participants were receiving services. Though gains attenuated after services stopped, treatment group members experienced lasting improvements in employment stability, job quality, and well-being, and we estimate the program's marginal value of public funds to be in line with other adult workforce programs. Post-program impacts are concentrated among participants who were hired by their host-site employer post-program, suggesting that encouraging employer learning about potential match quality is a key mechanism underlying the program’s impact, and additional descriptive evidence supports this interpretation.

Machine learning methods provide no evidence of treatment effect heterogeneity in a broad sample of job seekers using a rich set of baseline characteristics from a detailed application survey. We conclude that subsidized employment programs with a focus on creating permanent job matches can be beneficial to a wide variety of unemployed workers in the low-wage labor market.

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