Evaluating active labour market policies using randomised control trials

This paper discusses randomised controlled trials (RCTs) of labour market policies in the Nordic countries. Evaluating labour market policies is essential to ensure that public resources are allocated to effective interventions that improve employment outcomes, yet credible evaluation is challenging because programme participation is often selective. RCTs address this challenge by creating comparable treatment and control groups and are therefore widely regarded as the gold standard in policy evaluation. Using illustrative examples, the paper illustrates key issues related to motivating, designing, implementing, and analysing RCTs in a labour-market policy context. The examples cover interventions such as job-search assistance, monitoring, private service provision, and light-touch behavioural policies. The paper discusses ethical considerations, randomisation designs, implementation challenges, and analytical issues including take-up, outcome measurement, cost-effectiveness, and general equilibrium effects. It concludes that while the existing evidence base is substantial, continued experimentation and causal evidence remain important as labour market institutions and policies evolve. Building institutions that support RCTs is identified as one challenge.