The Lock-in Effect of the Swedish Establishment Programme: A Municipal-Level Evaluation of Labour Market Integration

Abstract

This thesis examines whether Sweden's Establishment Programme (Etableringsprogrammet) truly helps new refugees enter the job market in the short term, or if it ends up holding them back, through what's known as a "lock-in effect", especially after the big refugee influx of 2015. Drawing on data from all 290 Swedish municipalities between 2015 and 2018, collected from sources the Public Employment Service (Arbetsförmedlingen) and Statistics Sweden (SCB), we used a series of fixed-effects regressions. The results show a clear negative link: higher programme intensity correlates with lower municipal employment rates (β around -0.00045, significant at p < 0.01 in key models), and this holds up even with lags or alternative measures like gainful employment from RAMS data. Building on human capital theory, the evidence points to the programme's two-year emphasis on intensive language classes and civic training pulling participants out of the workforce temporarily, clashing with Sweden's tight, high-skill job market realities. On the policy side, this suggests tweaking the programme- maybe adding part-time work placements or more wage subsidies- to cut down on delays and get people into jobs faster. Overall, it adds a fresh municipal perspective to ongoing debates about active labour market policies for refugee integration.