Incentivizing Integration: Evidence from Social Impact Bonds

Last registered on December 01, 2023
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Pre-Trial

Trial Information

General Information

Title
Incentivizing Integration: Evidence from Social Impact Bonds
RCT ID
AEARCTR-0012519
Initial registration date
November 17, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
December 01, 2023, 4:22 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Tuomo Virkola
Affiliation
VATT Institute for Economic Research
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Other Primary Investigator(s)

PI Name
Hanna Pesola
PI Affiliation
VATT Institute for Economic Research
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PI Name
Matti Sarvimäki
PI Affiliation
Aalto University School of Business, Helsinki GSE, VATT Institute for Economic Research
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Additional Trial Information

Status
On going
Start date
2016-01-01
End date
2025-12-31
Keywords
Labor
Additional Keywords
JEL code(s)
J15, J64, M53, H57
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We study the effects of a new program for integrating unemployed immigrants into the labor market. A key part of this program is to create strong financial incentives for private service providers to place immigrants into gainful employment. Participation is randomized and service providers are compensated for the cost-savings to the public sector (measured by income taxes and unemployment benefits) relative to a control group participating in business-as-usual services. The new program provides a fast track to on-the-job training, while the business-as-usual services emphasize in-class language training. Thus, there is a potential trade-off between being employed in the short-run and accumulating general skills that can be beneficial in the long-run. We use the randomization and administrative data on participants' labor market outcomes, training participation and language skills to measure the effectiveness of the program both in the short- and long-run.
External Link(s)

Registration Citation

Citation
Pesola, Hanna, Matti Sarvimäki and Tuomo Virkola. 2023. "Incentivizing Integration: Evidence from Social Impact Bonds." AEA RCT Registry. December 01. https://doi.org/10.1257/rct.12519-1.0
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Experimental Details

Interventions

Intervention(s)
We study the Finnish Integration SIB (Social Impact Bond) -program targeted to unemployed immigrant job seekers. It was run by the Finnish Ministry of Economic Affairs and Employment in 2016-2019 and followed participants until the end of 2022. The intervention had two key components. First, it outsourced services of job seekers to third party service providers who were given financial incentives to place job seekers into gainful employment. In particular, service providers were compensated for cost-savings to the public sector by comparing (randomly selected) participant income taxes and unemployment benefits to a control group who were subject to business-as-usual services by the PES. Second, it placed immigrant job seekers into a short language training followed by on-the-job training or directly to a job while the business-as-usual services emphasize a longer in-class language and integration training.
Intervention Start Date
2016-01-01
Intervention End Date
2022-12-31

Primary Outcomes

Primary Outcomes (end points)
Labor earnings
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
- Employment
- Income taxes minus unemployment benefits
- Other social benefits
- Participation in active labor market programs
- Language skills
- Enrollment in formal education
- Completed educational degrees
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Our research design is based on an RCT among applicants eligible for the program. We study the effects of the program by comparing the outcome trajectories of treated and control individuals using administrative data.
Experimental Design Details
Not available
Randomization Method
The Public Employment Services (PES) office places eligible individuals on a list and reorganizes the list to a random order using the website random.org. Then, the PES assigns the first 70 to 80 percent of individuals on the list to the treatment group and the rest to the control group. Among applicants without tertiary education, 70% were randomized into treatment and 30% into the control group, while among applicants with tertiary education 80% were randomized into the treatment group and 20% into the control group. The randomization takes place regionally at the beginning of each week and is done separately for individuals who are subject to integration plans (have been in Finland for less than three years) and those who are not (have been in Finland more than 3 years).
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
According to preliminary data: 3656 individuals3656 individuals
Sample size: planned number of observations
According to preliminary data: 3656 individuals3656 individuals
Sample size (or number of clusters) by treatment arms
According to preliminary data: 3656 individuals, 2634 in the treatment group and 1022 in the control group
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

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