Economics of Inequality

More than just a job: Job guarantee pilot study proves to be a resounding success


Long-term unemployment makes people feel lonely and hopeless. So what can we do to eliminate this problem? A researcher from WU (Vienna University of Economics and Business) has tested an innovative approach: a job guarantee for everyone. The results of an initial pilot project are promising.

Prolonged unemployment not only hurts your personal finances but also your well-being, health, and social life. This what 60-year-old Werner V., a resident of the small Austrian town of Marienthal, had to learn the hard way: “After sending out more than 600 applications, I realized that my search for a job was hopeless. I was too old, too expensive, my age made me a bad match for employers looking for long-term employees, I was seen as overqualified for service jobs, ...”

Like so many other unemployed people like him, Werner V. might have ended up in a vicious circle of hopelessness and apathy if it hadn’t been for the research project led by Maximilian Kasy and Lukas Lehner: “People want meaningful work and fair pay, and if we can help them to achieve that, everybody benefits,” explains Lukas Lehner, an economist at the University of Oxford and at WU’s Research Institute for the Economics of Inequality.

As part of his dissertation at Oxford University, Lehner launched a unique experiment in 2020, in collaboration with the Lower Austrian Public Employment Service (AMS), based on an initiative by then AMS director Sven Hergovich: a universal job guarantee for all inhabitants of Marienthal. Anyone who has been unemployed for more than 12 months is guaranteed a meaningful job with fair pay – on a completely voluntary basis, not subject to any sanctions.

The results show that the experiment, carried out in cooperation with the Lower Austrian Public Employment Service, has been a resounding success. Long-term unemployment has been eliminated completely in Marienthal, and the participants not only regained financial security but also ended up feeling happier and more satisfied, like 60-year-old Werner: “The job guarantee has proven to be extremely valuable and useful for me. I’m working with the municipality and the local history museum now, doing archiving work to document the cultural, scientific, and economic heritage of the historic town of Marienthal.”

Marienthal’s important place in the history of science

The choice of location also had a historical background. Almost 100 years ago, the first empirical social sciences study on the mental and physical effects of unemployment was carried out in Marienthal. This study by Marie Jahoda, entitled “Marienthal: The Sociography of an Unemployed Community,” documented the everyday lives of the inhabitants of an industrial workers’ village who had lost their jobs when their factory was shut down. The study showed that prolonged unemployment leads to loneliness and feelings of resignation.

“The demographic make-up of Marienthal’s working population is roughly the same as the Lower Austrian average," says Lukas Lehner, “but the historical significance of Marienthal naturally played a role in our decision to carry out the study there.” Instead of documenting the problems caused by unemployment, however, this time the aim was the opposite: The present study looks at the effects that guaranteed employment has on the people concerned, the community, and the local economy.

The whole community benefits

At the beginning of the program, the participants received two months of preparatory training, including advice and support from social workers. After that, they received assistance in their search for a job, but they were also given the opportunity to identify and help create a new, subsidized job in the community – for example in a local carpentry workshop, in elderly care, or at the local school. In this way, the participants’ work ultimately ended up benefiting the entire community. The costs of the job guarantee are comparable to the cost of unemployment itself: One year of unemployment costs Austrian taxpayers around €30,000 per person, and the job guarantee requires a similar amount of money per year and participant.

Even though participation was voluntary, the program eliminated long-term unemployment altogether in Marienthal. It also resulted in a sharp drop in overall unemployment in the municipality. And word of this success has started to spread: In June 2023, Lukas Lehner presented his project to the European Parliament, and EU Commissioner Nicolas Schmit subsequently provided €23 million of funding to finance further job guarantee pilot projects.

“Long-term unemployment leaves scars on people’s lives, and it damages entire communities,” says Lukas Lehner, “but the Marienthal job guarantee shows that it’s possible to eliminate this damage almost completely with social policy measures that are both affordable and innovative.”

Detailed study results and further information

Kasy, M. & Lehner, L. (2022). ‘Employing the unemployed of Marienthal: Evaluation of a guaranteed job program’. INET Oxford Working Paper No. 2022-29.
Link to the study

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