Why Should we Integrate Income and Employment Support? A Conceptual and Empirical Investigation

Abstract The integration of active labour market policies within income support schemes – such as unemployment insurance and social assistance – has been a key component of social protection in high-income countries since the 1990s, with a rich literature reviewing its effects and implementation characteristics. Today, although this approach has become prevalent in many middle-income economies, its conceptual and practical application has not been studied in detail outside of high-income countries. This paper conceptualizes, for the first time, the implementation of integrated approaches, focusing on low- and middle-income countries (LMIC). We first develop a conceptual framework to understand how integrated policies can address labour market challenges, exploring the theoretical effects they exert on selected labour market and social dimensions. We then contrast these theoretical expectations with findings from the empirical literature on the effectiveness of integrated approaches. While many empirical studies find positive effects across different labour market dimensions, this is not a universal finding. To reconcile this discrepancy, we investigate the design and implementation of integrated approaches across LMIC and identify factors which contribute to their effectiveness.


Introduction
During the COVID-19 pandemicas in previous economic and financial crisesa major challenge for governments has been to counterbalance long-term consequences for labour markets.
Correspondence Address: Ver onica Escudero, Research Department, International Labour Organization, Geneva, Switzerland.Email: escudero@ilo.orgSupplementary Materials are available for this article which can be accessed via the online version of this journal available at https://doi.org/10.1080/00220388.2023.2246621.This article has been corrected with minor changes.These changes have no effect on the academic content of the article.
Addressing the immediate needs of people most affected, while laying the foundation for sustainable job creation, requires a comprehensive policy response.This paper focuses on the central role that active labour market policies (ALMPs) can play when combined with income support policies, in providing people with protection and opportunities for sustainable ways of living.
ALMPs are government policies aimed at helping and incentivizing workers to enhance their employability, actively search for employment, and find suitable work faster.ALMPs include training, public works, employment subsidies, support for self-employment and micro-enterprise creation, and labour market services (ILO (2016) and Asenjo et al. (2019)).Furthermore, we focus on income support policies seeking to provide basic income security for working-age individuals, distinguishing between contributory and non-contributory schemes.The former mostly intends to compensate for income declines during unemployment, while the latter provides basic financial aid to poor households (Berg 2015). 1  The integration of ALMPs within unemployment and social assistance schemes has become a key component in fostering decent work in low and middle-income countries (LMIC). 2  Although ALMPs and income support have been used extensively in LMIC for several decades, the shift towards integration has occurred recently.This shift differs from initial activation concepts in high-income countries, which stressed conditionality when accessing income support and redirected resources towards ALMPs while restricting income support.We instead focus on strategies that leverage complementarities between ALMPs and income support.Such strategies are in line with international labour standards, recommendations from international organizations and some streams of the academic literature. 3The integration of these measures in LMIC has been implemented through multiple approaches with potentially differing effects on poverty and employment.Therefore, the conceptual and practical application of integrated approaches outside of high-income countries merits attention.
This paper conceptualizes, for the first time, the implementation of integrated approaches in LMIC.We develop a conceptual framework to understand how such integrated policies address labour market challenges and explore the role of implementation factors.Thus, we look at the theoretical effects that each component of integrated approaches alone has on selected labour market dimensions and contrast this with the effects of combined policies (section 2).Subsequently, we examine the literature on the effectiveness of integrated approaches and discuss their prevalence and characteristics in LMIC (section 3).We find that, while institutional context is key, it is possible to achieve policy integration through various institutional arrangements.Some architectures enable a greater integration of policies (e.g.one-stop shops), but require stronger coordination between agents and an enhanced set of policy tools.Other architectures are managed more flexibly (e.g.models coordinating links between existing, separately implemented policies), but their weaker integration makes favourable enabling conditions even more important.Finally, given the variation in the implementation of combined approaches, and the fact that empirical findings are not systematically positive, we explore the features that shape the effectiveness of integrated approaches in LMIC (section 4).We build on the existing (though limited) empirical literature and complement it with quantitative and qualitative information from our own field studies.We identify three sets of enabling conditions that are needed to harness the full potential of integrating approaches, contrasting them with the barriers that LMIC need to tackle for effective policy integration.
We conclude that integrated approacheswhen properly designed and implementedhave the potential to protect people from acute material vulnerabilities, while improving workers' prospects, including addressing the lack of job quality that disproportionately affects the most vulnerable.Such a combination ultimately enables people to leave behind poverty.

Conceptual underpinnings: expected effects of an integrated approach
In view of an increasing adoption beyond high-income countries, the conceptual basis of integrated approaches merits closer examination.We first put forward five clusters of labour market Integrating income and employment support 3 Note: Ã Dark blue cells illustrate the overall gains from an integrated approach, which are often expected to be greater than the effects of individual policies implemented independently, as explained in the text.
Integrating income and employment support 5 dimensions and consider the effects each component of an integrated approach can alone exert on the clusters.We then assess the complementary nature of ALMPs and income support schemes and conceptualize the potential benefits of integrated approaches.We focuswhere possibleon LMIC.Table 1 summarizes the theoretical effects by cluster, separately for income support (light blue rows), ALMPs (mid-blue rows) and integrated policies (dark blue rows).

Labour market dimensions
Labour market policies exert their effects over a plurality of labour market dimensions, which we organize in five clusters: labour demand, labour supply, quality of matching, in-work poverty reduction, and work quality.The first three dimensions are traditionally studied by economic literature (Blundell and Macurdy 1999;Card 1987;Flinn 1986;Jovanovic 1979;Pencavel 1986), as they determine employment levels and wages, and hence inform some of the most relevant labour market indicators.A deeper analysis of policy effects on these three clusters also helps conceptualize further outcomes, such as work hours, contract durations and the market share of part-time contracts, which we explicitly capture under the 'in-work poverty reduction' and 'work quality' clusters.Indeed, labour demand and labour supply are important clusters, as the central aim of many labour market policies is to stimulate labour force participation and employment.In a neoclassical model, this translates into a movement of the demand and/or supply curves.For instance, an employment subsidy can expand labour demand, as firms hire more workers, and wages increase as a consequence (Blundell et al. 2004).Conversely, more generous income support may contract the labour supply for a given wage, consequently decreasing the employment rate (Chetty 2008;Schmieder and von Wachter 2016).
Examining the third cluster, quality of matching, allows us to capture the effects of policies on labour market aspects that go beyond employment and wage levels.Quality of matching captures the intrinsic value of a job in which workers' skills and career ambitions match those required by employers (see Ferreira and Taylor 2011;Zhang, Salm, and van Soest 2021).Thus, labour market policies can be deemed successful when they favour matches where the needs of employees and employers coincide.At the individual level, a worker, whose tasks are either systematically above or below their skills level, could lose motivation or underperform.Similarly, an employer whose workers cannot guarantee an appropriate level of productivity may find operating in the market less profitable or unsustainable.From a societal perspective, a labour market is inefficient when there is a systematic over-or under-qualification of workers, as this indicates a structural misallocation of resources and a loss of economic and human potential (McGuinness 2006;McGuinness et al. 2018;Tsang 1987).
However, labour market policies ought not to simply be about workers obtaining 'a job', but rather be conducive to decent work that guarantees appropriate working conditions. 4The availability of such jobs is a basic right for workers central to achieving justice within societies.Therefore, we introduce a second set of clusters that accounts for job characteristics, including in-work poverty reduction.In-work poverty exists everywhere, but is more prevalent in LMICs, due to a lack of formal protection for workers, the need for many workers to engage in informal, low-productivity employment and consequently, comparatively low unemployment rates.This means that effective policies must facilitate the reduction of in-work poverty.
Our final cluster is work quality.The wage level is one of the most relevant determinants of quality within an employment relation.This final cluster thus overlaps with the fourth already presented.Nevertheless, work quality goes beyond wages, capturing a wider range of characteristics (Tatsiramos 2014).The COVID-19 pandemic has for example underscored the importance of formal work arrangements based on contractual conditions inclusive of social insurance, sick leave, and flexible work arrangements.Such arrangements need not be the sole prerogative of high-income countries.To the contrary, the introduction of labour market policies gives governments the leverage to facilitate the diffusion of formal jobs, thus improving working conditions, and potentially strengthening the formal economy.

Expected effects of income support policies
Contributory social protection schemes play a major role in supporting the income of workers in high-income countries.They exist in LMIC, too, although less systematically, covering mostly workers in formal employment.As the light blue rows in table 1 indicate, the main function of unemployment insurance is the immediate reduction of poverty through consumptionsmoothing after job loss (Chetty 2008;Devereux and Sabates-Wheeler 2004;ILO 2017a).The consequences of losing a job on household consumption are comparatively severe in LMIC (Gerard and Naritomi 2021;Liepmann and Pignatti 2021).In such circumstances, access to adequate unemployment insurance plays a crucial role for guaranteeing minimum income standards and protecting the limited physical and financial assets of unemployed workers (Devereux and Sabates-Wheeler 2004;ILO 2017a).By protecting incomes, unemployment insurance also allows workers to search more extensively for suitable new jobs and prevents them from needing to accept lower quality jobs.
However, there is a limited availability of contributory schemes in countries where labour market regulations are poorly enforced and where many people work informally, such that social security contributions tend not to be paid for them.Therefore, in LMICs, non-contributory support is often the only available measure (Barrientos 2010).Such schemes distribute financial aid to the unemployed and complement the income of low-wage workers.Like unemployment insurance, non-contributory income support guarantees minimum income standards and can protect against needing to accept jobs paying very low wages.Non-contributory schemes help act against social exclusion, encouraging transitions from low (subsistencelevel) to more productive activities, enabling the most disadvantaged to actively participate in their communities and societies (Devereux and Sabates-Wheeler 2015;ILO 2012).
Regarding their interaction with the five clusters, because income support (contributory and noncontributory) allows workers to search longer for a suitable job, such schemes can positively affect the quality of matching and reduce in-work poverty; to the extent that there are decent jobs available in any given labour market (light blue rows in table 1).Non-contributory schemes go a step further in reducing in-work poverty, as they also aim to facilitate access to basic services.
From a theoretical perspective, income support may negatively affect the labour supply cluster, as it may induce workers to remain unemployed for longer (Chetty 2008;Schmieder and von Wachter 2016).This would imply a partial loss of human capital, with possible negative consequences for subsequent wages (Nekoei and Weber 2017).The negative impact of income support on labour supply has received considerable attention in labour economics, as empirically, unemployment benefits tend to lengthen unemployment spells in high-income countries (Schmieder and von Wachter 2016).
However, in LMIC, the negative effects on labour supply can be expected to be smaller, as the level and duration of income support tend to be moderate, and individuals often have no choice other than to work for subsistence.Empirical literature has shown that the employment disincentive effects of unemployment benefits are comparatively low in contexts with widespread informality (Britto 2022;Gerard and Gonzaga 2021;Gonz alez-Rozada and Ruffo 2016;Liepmann and Pignatti 2021).When formal employment opportunities are scarce, individuals secure such jobs at a slow rate, regardless of the benefits they may receive (Gerard and Gonzaga 2021).In addition, social assistance programmes have no significant negative impact on employment (Alz ua, Cruces, and Ripani 2013; Banerjee et al. 2017;Barrientos 2012;Bosch and Schady 2019), meaning that the 'lazy welfare recipient' stereotype is empirically untrue for LMIC (Banerjee et al. 2017).Taken together, these results indicate that the positive effect of Integrating income and employment support 7 income support on quality of matching and in-work poverty reduction dominates possible negative effects that could arise due to prolonged unemployment.
Eligibility for unemployment benefits usually ends when workers re-enter employment.Neoclassical economic theory suggests that the lack of observation of informal employment by authorities may encourage benefit recipients to move into informal employment, enabling them to earn a wage while claiming benefits (Gerard and Gonzaga 2021).Therefore, income support may negatively affect the work quality cluster if workers replace formal with informal employment.Empirical evidence shows that significant shares of unemployment benefit recipients indeed move into informal employment, but this typically entails considerable wage and consumption penalties.Therefore, informal jobs appear to be largely taken up out of economic necessity (Liepmann and Pignatti 2021).
In contrast, the incentive to move from formal to informal employment may be higher for recipients of non-contributory cash transfers.Theoretically, this can be expected to occur in some means-tested programmes, where recipients exit the programme once their income from formal employment (the only income authorities can monitor) exceeds a certain threshold.In line with this high implicit tax on formal income, some cash transfer recipients appear to move into informal jobs to remain eligible for income support (Bergolo and Cruces 2021;Bosch and Schady 2019).
Finally, income support has no clear direct effect on labour demand.Unemployment insurance can stabilize aggregate demand for goods and services, especially during economic downturns (Farber and Valletta 2015;ILO 2014;Rothstein and Valletta 2017).Likewise, cash transfers increase consumption and thereby promote economic growth (FAO 2017b;Mathers and Slater 2014).These macroeconomic effects indirectly stimulate labour demand and can therefore lead to employment creation.

Expected effects of ALMPs
Like income support schemes, ALMPs can exert an effect on the labour market through the five clusters (table 1).ALMPs can be applied in a range of contexts, due to their multidimensional and versatile nature (Card, Kluve, and Weber 2018), increasing their potential effects on several labour market outcomes simultaneously.Yet, as we later discuss, the actual impact of ALMPs largely depends on the appropriateness of the implementation mechanisms, which include giving participants sufficient income support.
The mid-blue cells in table 1 illustrate the theoretical effects that different ALMPs have on labour market outcomes by cluster.Various ALMPs are designed to directly stimulate labour demand: in the case of public works, jobs are created in the short-term only, whereas microenterprise creation programmes and employment subsidies aim for a more permanent job creation (the latter can also support existing jobs during economic crises).Indirect income effects can further increase the programme effectiveness and have a multiplier effect.For example, hiring subsidies reduce employers' wage costs, stimulating labour demand (Neumark 2013).Similar effects pertain to micro-enterprise creation programmes (L opez Mourelo and Escudero 2017). 5Some of these policies (e.g.hiring subsidies) can be of particular benefit to those groups hardest to employ, such as the disabled (Lalive, Wuellrich, and Zweim€ uller 2013).
In comparison, labour market services and training policies have the potential to increase labour demand indirectly.Evidence from high-income countries indicates that job-search assistance reduces the cost of vacancy creation for enterprises (Calmfors and Lang 1995;Pissarides 1990;Schmid, Speckesser, and Hilbert 2001).Similarly, training policies can also foster labour demand by increasing marginal productivity, making it efficient for firms to employ more workers (Calmfors 1994). 6At the macroeconomic level, by sustaining or promoting employment, wage subsidies and short-time work can thus reduce adverse effects of recessions and of fundamental labour market transformations (Escudero et al. 2019).Indeed, the empirical evidence tends to confirm the positive impact ALMPs have on individual-level outcomes during a recession (see Card, Kluve, and Weber 2018;Forslund, Fredriksson, and Vikstr€ om 2011;Lechner and Wusch 2009).
In terms of labour supply, supply-side ALMPs (i.e.training and employment subsidies), but also some demand-oriented measures (i.e.public works and micro-enterprise creation) play a major role in keeping people active in the labour market when hiring is low, limiting long-term unemployment and discouragement, as well as improving workers' chances of re-employment.Meanwhile, employment subsidies directly increase labour supply, by topping up incomes of targeted groups during a downturn.For example, wage subsidy programmes have proven effective at fostering labour market integration of immigrants in European countries (Butschek and Walter, 2014).Similarly, labour market serviceswhich bridge the gap between labour supply and demand through job-placementcan increase employment by addressing information constraints and improving workers' employability.Even when labour supply-oriented ALMPs do not immediately reduce unemployment (Schmid 1996), they can counterbalance skills shortages (e.g. by providing training and labour market services).Thus, they facilitate a reallocation of employment opportunities, improving the perspectives of disadvantaged groups, such as unskilled workers, the long-term unemployed (OECD 1993), and migrants who need to integrate into a new labour market.Training, in particular, can contribute to adjusting the qualifications of jobseekers, increasing mobility into sectors and across regions where labour demand is growing (Bellmann and Jackman 1996a), which can be beneficial when targeting disadvantage groups (J-PAL 2017; Kluve 2010; Lyons and Zhang 2017).For instance, evidence from Uganda indicates that young workers in receipt of either vocational or firm-provided training significantly improve their sector-specific skills, employment probabilities, and labour market situations (Alfonsi et al. 2020).
Several ALMPs can be effective in tackling information constraints and improving the quality of matching.Labour market services make job search and hiring more effective through counselling, placement and job-search assistance (Abrassart 2015;Boone and van Ours 2004b).The empirical literature identifies two conditions for ensuring such positive effects.First, small caseloads improve the quality of counselling and placement; second, close monitoring increases job-search incentives for participants (J-PAL 2018; Blasco and Pertold-Gebicka 2013;de Koning and Arents 2001;Fredriksson 2021).In addition, by equipping workers with new skills, training policies can indirectly improve the quality of matching by improving the effectiveness of workers' job searches.Search effectiveness is further enhanced by the positive signal that completed training gives to employers (Abrassart 2015;Bellmann and Jackman 1996b;Boone and van Ours 2009;Layard and Nickell 1986), and when training manages to prevent skills bottlenecks (Schmid, Speckesser, and Hilbert 2001).Finally, employment subsidies can reduce prevailing information asymmetries in the hiring process.Employers can learn about worker characteristics while participants gain valuable work experience, (Fredriksson 2021;Sch€ unemann, Lechner, and Wunsch 2015).This can also increase labour demand and workers' labour force attachment (McKnight and Vaganay 2016).
In addition to these positive effects, ALMPs can lead to unintended, negative outcomes.First, ALMPs that increase participants' employment may displace non-participants (Cr epon et al. 2013).This is noteworthy among employment subsidies targeting specific categories of workers (de Koning and Arents 2001), such as people with disabilities (Datta Gupta, Larsen, and Thomsen 2015).A similar displacement effect could happen among micro-enterprise creation schemes, when the new micro-enterprises set up by beneficiaries increase market competition, which creates disadvantages for unsubsidised enterprises and may even result in firm closures (Rom an, Congregado, and Millan 2013).However, such negative effects can be expected mostly during a crisis, when labour demand is depressed and jobs scarce.In such situations, given that ALMPs are particularly effective for disadvantaged groups, redistributing employment opportunities in their favour can be justified both economically and socially, even if an ALMP has small aggregate effects.
Integrating income and employment support 9 Second, ALMPs may discourage participants from searching for new jobs throughout participation, resulting in decreased incomes and employment rates in the shorter term (van Ours 2004).However, this 'lock-in' effect is usually counterbalanced by positive participation effects (Card, Kluve, and Weber 2018;Lechner and Wunsch 2009).Empirical studies indicate that individuals facing difficulties entering the labour market, such as refugees, can benefit significantly from participation in training programmes, catching up and even outperforming nonparticipants after completing training as a result of the higher returns from human capital (Arendt, 2022).Moreover, 'lock-in' effects are less of a concern in LMIC, where employment rates are comparatively large among vulnerable workers (Layard, Nickell, and Jackman 1991).
Finally, certain policies may be redundant, in which case their effects would have materialized in their absence.This potential 'deadweight loss' is mentioned in the literature, mostly in relation to public works and employment subsidies (Bassanini and Duval 2006; Cebri an, Moreno, and Toharia 2011; Martin and Grubb, 2001).
Traditional economic literature has mainly examined how ALMPs impact labour demand, labour supply and the quality of matching (Layard, Nickell, and Jackman 1991;Layard and Nickell 1986;OECD 1993;Pissarides 1990), often neglecting the effects of such policies on inwork poverty reduction and work quality.Yet, in countries where workers are forced to revert to informal and low-productivity employment, addressing in-work poverty and improving work quality might be the most relevant and challenging objective (ILO 2016).All ALMPs can reduce in-work poverty and improve the quality of work, since their objective is to help people find better jobs faster.Although earning above poverty can be viewed as an enhancement of job quality, poverty reduction alone does not in itself guarantee better working conditions more broadly, such as job formality, suitable working hours, and proper utilisation of skills.Policies that provide remuneration in exchange for participation (i.e.employment subsidies and public works)can potentially reduce in-work poverty, if the income received while participating is sufficiently high.The objective of some policies, such as public works and employment subsidies during a crisis, might be indeed to counteract poverty during participation.However, most programmes have longer-term post-participation objectives, some of which include improving labour market conditions.
Post participation, the potential effect of ALMPs on these objectives is not homogenous across policy types.Training, is expected to lead to better quality work (including lower inwork poverty), due to the improved skills acquired.Employment subsidies can similarly be expected to affect work quality, as they allow people to improve their skills on the job and in the formal sector.However, there remains some uncertainty regarding the timing of the effects of training, which materialise only in the long-term in high-income countries (Card, Kluve, and Weber 2018;Forslund, Fredriksson, and Vikstr€ om 2011), and in the short-term in Latin America (Escudero et al. 2019).In their study on Uganda, Alfonsi et al. (2020) show that gains from firm-provided training materialise quickly but fade over time, whereas those from vocational training emerge slowly but are long lasting.
The effects of the remaining three ALMPs on work quality are less clear: Labour market services can play a role in reducing in-work poverty and enhancing work quality through job-search assistance and counselling.These effects have been largely confirmed by studies conducted in high-income countries (Card, Kluve, and Weber 2018;Cr epon et al. 2013;Kluve 2010).In LMICs, however, while positive effects have been observed (Acero et al. 2009;Dammert, Galdo, and Galdo 2015), the dearth of research makes it difficult to generalize these results.In some LMICs, public employment services suffer from limited institutional capacity, thus impairing their effectiveness and efficiency.Blattman, Fiala, and Martinez 2014;de Mel, McKenzie, and Woodruff 2008;Fafchamps and Quinn 2017).The impact on other work quality indicators is less clear.While the relationship between informality and self-employment, varies across countries, there seems to be a positive correlation in LMIC (Maloney 2003).This raises concerns about the capacity of these programmes to facilitate an effective transition towards formal work.Finally, the effect of public works is ambiguous.While they raise the living standard of beneficiaries during participation (Jalan and Ravallion 2003;Ronconi, Sanguinetti, and Fachelli Oliva 2006), the effect on poverty reduction following participation is less obvious (Escudero 2018a;Escudero et al. 2019).Public works could improve work quality, if there is sufficient human-capital accumulation.In a few cases, the empirical literature has confirmed this intuition (Escudero, L opez Mourelo, and Pignatti 2020); but often public works only perpetuate the incidence of low-quality jobs (Escudero 2018a; Hernani-Limarino, Villegas, and Y añez 2011; Zimmermann 2012).

Conceptual framework for the integration of income support with ALMPs
ALMPs have the potential to improve workers' employability.However, sometimes the effectiveness of such policies is limited, according to empirical analyses.In LMIC, a major challenge is to ensure that targeted workers participate in ALMPs.As this is costly and requires a time investment, without basic financial support, many workers are not able to participate (ILO 2016).Ensuring correct targeting is especially relevant since ALMPs, on average, have long durations, with positive impacts becoming evident only after individuals participated for a few months (Escudero et al. 2019).Unemployment insurance or cash transfers, on the other hand, provide the financial support to allow workers to take the time to search for a new job, but do not sustainably improve employment prospects in the medium term, as they do not aim to enhance skills.This implies that workers likely continue to work for low pay and without decent working conditions (ILO 2017b).Social protection and employment promotion are therefore jointly required.Only through their integration, these policies are fully effective in improving labour market outcomes.Integrated approaches exploit policy complementarities, whereas implementing one type of policy while reducing the other, or implementing policies in parallel but without their integration could create competition between policy objectives (Asenjo et al. 2019).
The dark blue cells in table 1 illustrate the potential overall impact of integrated approaches on labour market outcomes, which often exceed the sum of the impact of individually implemented measures.Although income support policies have no direct effect on labour demand, integrated approaches are expected to generate greater gains than produced by ALMPs alone.This is, first, because income support provides incentives for people to participate in ALMPs.Second, integrated approaches can be an appropriate reaction to major labour market disruptions, such as recessions or weather-related crises (e.g., floods, droughts).Such shocks have a disproportionate impact in LMIC, where most workers are not covered by contributory social protection schemes.In addition, social assistance tends to be limited in its duration and regional reach and suffers from insufficient financing and legal foundation (ILO 2017a, Asenjo et al. 2019).An integrated approach would aim to provide the necessary income support to protect people from drastic income loss, while ensuring that disadvantaged workers are able to participate in ALMPs. 7Adequate income support also implies that workers do not rush into lowquality employment (ILO 2017b).This allows ALMPs to perform their usual role, including enabling individuals to respond to changes in skills demand, while also benefiting the labour market more broadly when faced with a shock.
The integration of policies can also enhance labour supply and the quality of matching.When combined with income support, ALMPs helps counteract mismatches in skills demand Integrating income and employment support 11 and supply and increase workers' productivity levels, both through their impact on individual participants and externalities (Calmfors and Skedinger 1995;OECD 1993).In combination, ALMPs increase labour force attachment and can help individuals move into higher valueadded employment.Productivity is further enhanced if workers possess the skills demanded in a given labour market and do not suffer from severe forms of poverty.In the case of quality of matching, ALMPs reinforce the income support effect by facilitating a longer and more active job search, which enables better matching.This requires regarding poverty alleviation and enhanced productivity as complementary policy objectives (Asenjo et al. 2019).
Finally, integrated approaches help tackle long-standing barriers that prevent workers in LMICs from escaping in-work poverty and from accessing work quality.ALMPs help improve workers' education and skills.However, as argued before, this needs to be combined with financial support to allow for ALMP participation and to compensate for insufficient income and consumption among unemployed workers and the working poor.
Integrated approaches can therefore help the beneficiaries of income support to overcome barriers in their access to decent work, thereby reducing inequalities between different groups in the labour market.This policy integration fosters better working conditions for those otherwise stuck in employment with low remuneration, job quality, and productivity, with a view to enabling them to transition out of poverty in a sustainable manner (Asenjo et al. 2019).

Empirical evidence: What works in terms of integration?
The integration of income support and ALMPs and the motivations behind their joint implementation have significantly evolved since its inception in EU countries during the late 1980s and early 1990s.At the time, confronted with persistent unemployment, the integration of both approaches aimed to 'activate' unemployed individuals, at the expense of more generous financial aid during unemployment.In contrast, during recent years, the main objective of integration has been to leverage the complementarities between both approaches, and not to replace either of them.Under this more equilibrated and human-centred model, multiple evaluations in high-income countries have illustrated that such integrated policies can help reduce the rate and duration of unemployment and improve employment conditions (see Asenjo et al. (2019)).
While evidence on the effectiveness of integrated approaches is scantier in LMIC, existing evaluations 8 show that integrated approaches can improve labour market and poverty outcomes in an economically meaningful way, when compared to the separate implementation of policies.This is especially true among programmes for self-employed individuals.For example, a randomized controlled trial of a conditional cash transfer programme (CCT) in Nicaragua -Atenci on a Crisisshowed that participants who, in addition to a cash transfer, received either vocational training or an investment grant, were more resilient to environmental shocks and had higher incomes and consumption two years after participation (Macours, Premand, and Vakis 2012).These effects were not observed among households in receipt of a CCT only.Similar results were observed for a programme in Sri Lanka that provided a combination of training with cash transfers to actual and would-be self-employed women (de Mel, McKenzie, and Woodruff 2014).This randomized experiment revealed that training in itself did not enhance firm productivity, whereas those participants who received also the monetary support, had higher profits and sales and improved their management practices and financial planning.
Micro-entrepreneurship schemes implemented as a part of wider social protection programmes have also yielded significant positive effects.One study analyses the Micro-entrepreneurship Support Programme (MESP) directed at households registered on a social assistance programme and implemented in Chile in 2006 (Mart ınez, Puentes, and Ruiz-Tagle 2018).Most participants were unemployed or underemployed female household members.While the control group only participated in the social assistance programme, the two treatment groups additionally received training courses on business and technical skills and start-up capital (US$600 or US$840, respectively).Nine months after participation, the likelihood of selfemployment was 14.8 and 25.2 percentage points higher for the group that had received the smaller and the higher start-up capital, respectively.Studies have also shown the potential of integrated approaches to support households in fragile and conflict-affected regions.In Afghanistan, the joint provision of assets, cash grants and skills training through the Targeting the Ultra Poor programme had a large positive impact on consumption, financial inclusion and women's empowerment (Bedoya et al. 2019).
Furthermore, interventions combining different ALMPs within income support or social protection schemes have also produced positive effects.One example of a comprehensive intervention is the unemployment insurance scheme of Mauritius, available to unemployed workers, independently from whether their former job was formal or informal.To receive unemployment benefits, recipients are required to participate in different types of ALMP.An impact evaluation study revealed that training had the largest positive effects in the medium term.This effect took a while to materialize (Asenjo et al. 2019), which is consistent with the lagged positive effects of human capital accumulation.Another example, is a two-year programme that provided access to a comprehensive set of ALMPs integrated within social assistance schemes, with the objective of helping beneficiaries start and maintain a self-employment activity.Almost 10,500 extremely poor households participated in a randomized controlled trial of this integrated poverty relief programme in Ethiopia, Ghana, Honduras, India, Pakistan and Peru (Banerjee et al. 2015).The study revealed positive and significant effects for a range of outcomes, including increased income and food security and improved mental and physical health.Positive effects continued three years after the programme had started; while the same was not observed when only cash transfers were involved.Likewise, Bossuroy et al. (2021) explore the effect of a multifaceted economic inclusion interventionincluding training and lump-sum capital grantsimplemented in Niger for female beneficiaries of a national CCT.Findings revealed significant positive impacts on consumption and food security among beneficiaries of income and active support six-and 18-months post-intervention, relative to those in receipt of cash transfers only.Lastly, longer-term effects have been identified in a nationwide integrated programme in Bangladesh, with positive impacts sustained four and seven years after participation (Bandiera et al. 2017).
Despite the positive effects observed in various contexts, the literature also highlights that integrated approaches are not by definition effective.Rather, their positive impact hinges on certain implementation and design characteristics.This is illustrated by an evaluation of a training component of the unemployment insurance in Colombia (Medina, N uñez, and Tamayo 2013), which did not have positive effects for programme participants or their households.This was because comparatively high-income support was combined with voluntary job training, which was associated with a high drop-out rate.A similar conclusion was drawn by an earlier study assessing an Argentinian micro-entrepreneurship programme for social assistance recipients (Almeida and Galasso 2007).The Microemprendimientos Productivos programme had a similar structure to the one later implemented in Chile (the MESP discussed above) in that participants received a productivity cash grant combined with training.However, only young, and more educated participants saw their labour market outcomes improve.This lack of effectiveness was explained by the implementation characteristics of the training component, which was less well organized and less intense than in the Chilean MESP.Similarly, a meta-analysis of 37 impact evaluation studies of entrepreneurship programmes in LMIC finds a wide variation in programme effectiveness across interventions, depending on the target group and the specific country context (Cho and Honorati 2014).Nevertheless, these findings suggest that stand-alone interventions are less likely to make a difference than integrated approaches that tackle multiple constraints.
Integrating income and employment support 13 Lastly, similar conclusions can be drawn from an impact evaluation assessing the effect of a public works scheme implemented within a social assistance programme in Uruguay named Plan de Asistencia Nacional a la Emergencia Social (PANES) (Escudero, L opez Mourelo, and Pignatti 2020).This study analysed the effects of participating in the public works scheme Trabajo por Uruguay aimed at fostering social inclusion, by requiring beneficiaries of income support to work during five months in community projects in return for a salary corresponding to twice the sum they would have otherwise received.Despite positive and mildly significant effects for this public works component in raising employment probabilities, no statistically significant effects were found among any of the treatment arms (namely, only active support, only income support or joint implementation).The authors therefore argue that the programme fell short due to the limited benefits provided, its low intensity and the lack of human capital improvement within the ALMP.
Overall, the impact evaluations yield two central conclusions.First, independent of the specific implementation context, the integration of active elements with income support can be effective, both for employment probabilities and work quality.Second, this requires appropriate implementation, as we develop further below.

International patterns and relevant national models
In LMIC, the shift towards integration has only occurred recently, despite income support and ALMPs having been used extensively for several decades.Nevertheless, integrated approaches are now frequent in these countries.
We build on Asenjo et al. ( 2019)who for the first time comprehensively mapped the implementation of integrated approaches outside high-income countriesto illustrate the quantity and diversity of the integrated approaches in LMIC.The original analysis draws on two databases -SSPTW and ASPIREto study the joint implementation of income support with ALMPs, which we complement with qualitative information from Carter, B edard, and Peyron Bista (2013), among others.In the Supplementary Material, we provide methodological details on the construction of variables from the SSPTW and ASPIRE data.
We find that, today, many LMIC are implementing integrated approaches, which vary substantially in aspects that could determine their effectiveness.First, the degree of integration between individual policies varies across countries.Sometimes, pre-existing ALMPs are adapted such that income support beneficiaries, access ALMPs.For example, the Argentinean programme Seguro de Capacitaci on y Empleo targets beneficiaries of the CCT Plan Jefes y Jefas de Hogar Desocupados (ILO 2016;L opez Mourelo and Escudero 2017).In other countries, one-stop shops deliver income support and ALMPs.For example, all regions in Mongolia have had one-stop shops since 2012.There, workers can register for assistance programmes and claim social insurance benefits (Peyron Bista and Carter 2017).
Second, policy administration also varies.In some countries, compulsory ALMPs are included within an unemployment benefit or social assistance scheme.For example, the unemployment benefit scheme of Mauritius offers job placement, counselling support and support for microenterprise creation, while also providing income support for twelve months (Asenjo and Pignatti 2019;Liepmann and Pignatti 2019).Other countries implement ALMPs as voluntary offers within CCTs.Uruguay's cash transfer programme PANES, for example, offers work-ready beneficiaries the option to participate in its public works programme Trabajo por Uruguay (Escudero, L opez Mourelo, and Pignatti 2020).
Third, the combinations of the different ALMPs and social protection measures mainly depend on the development level of a social protection system.Most low-income countries lack an unemployment benefit scheme anchored in national legislation (see the majority of sub-Saharan African countries in figure 2).Yet, integrated approaches are present in these countries, because ALMPs are integrated into non-contributory cash transfer programmes (see the same countries in figure 1).In fact, only six of the 34 LMIC with available data lack an ALMP that is part of a cash transfer programme.The variety of these ALMPs is greater as national income levels increase.As shown in figure 1, 19 middle-income countries, 9 as well as Chile and Uruguay, have implemented a varied ALMP approach, while this is the case for only one lowincome country (Rwanda).
As countries' income level rises, unemployment insurance policies play an increasing role in protecting incomes after workers' job loss and are combined with a range of ALMPs.All but one of the low-income countries in our sample have no national unemployment protection scheme (figure 2). 10 In Tajikistan, however, unemployment benefits are provided along with labour market services and training.Meanwhile, 16 of the 42 lower-middle income countries with available information, and 28 of the 57 upper-middle-income countries, have unemployment support schemes enshrined in national law.This is most often the case in Europe and Central Asia, as figure 2 shows.
Regarding the types of ALMPs, public works are prevalent in LMIC, aimed at compensating for insufficient jobs and, in this way, redistributing incomes.Of all the LMIC with available information, 74% have public works embedded in social protection.By contrast, higher-middleincome countries often combine different ALMPs, such as training and start-up incentives, thereby targeting labour supply and demand (Auer, Efendioglu, and Leschke 2008).When implemented in conjunction with a cash transfer scheme, ALMPs tend to be more diverse than when paired with unemployment insurance.Yet, this finding that integrated approaches in lowincome countries are combined with cash transfer schemes has consequences, as these are typically based on means testing to target vulnerable groups.Integrating income and employment support 15 Finally, the design and implementation characteristics of integrated approaches vary.Unemployment insurance typically involves mandatory participation in job placement services (Myanmar and Tunisia).In some lower-middle-income countries, unemployment insurance beneficiaries can also join a training intervention; as in Egypt, Kyrgyzstan, Lao People's Democratic Republic, Republic of Moldova, Ukraine, Uzbekistan, and Viet Nam.In upper-middle-income countries, unemployment benefits recipients have a more varied set of ALMPs available.There are also schemes that include voluntary ALMP participation.While not taken account of in quantitative databases, the case studies of Carter, B edard, and Peyron Bista (2013) find that such approaches often target vulnerable workers.For example, in the lower-middle income countries of Mongolia and Viet Nam, unemployed workers can benefit from job placement services and personalized counselling; and, if appropriate, are referred to training programmes.Meanwhile in Argentina, China (uppermiddle-income countries) and Chile, specific vulnerable groups receiving unemployment benefits are referred to employment subsidies to incentivize businesses in the hiring of jobseekers.These schemes target labour market entrants or disabled workers in Argentina, older workers in China, and disadvantaged young workers and women in Chile.However, the unemployment benefit programme of Bahrain offers training to workers with relatively advantaged employment prospects.
All these different design and implementation characteristics have an impact on the effectiveness of policies.Signalling these differences is a step towards a better understanding of combined ALMPs and social protection approaches, but, as discussed in the next section, it is imperative to know how and to what extent implementation characteristics shape policy effectiveness.

Characteristics driving programme success in LMIC
Conceptually, the combination of income support with ALMPs is expected to have beneficial effects.Yet, the micro-econometric literature does not always find significant improvements in participants' outcomes.This is consistent with systematic studies of ALMPs, which have produced mixed results on both the magnitude and, less often, the direction of their impacts (Card, Kluve, and Weber 2010;Greenberg, Michalopoulos, and Robins 2003).Effects differ by country (Card, Kluve, and Weber 2010;Kluve 2010), among beneficiary groups (Card, Kluve, and Weber 2018;Kluve et al. 2019) and between different policy combinations (Escudero et al. 2019).This illustrates that targeting, design and implementation characteristics determine the effectiveness of integrated policies (Asenjo et al. 2019;ILO 2016).
What are these characteristics?Though it would be preferrable to answer this question based on impact evaluations that disentangle the causal mechanisms behind the success of such policies, the current evidence is limited.This section thus takes a different approach.To conceptualize what drives the success of integration strategies, we build on the scant existing empirical literature (which still often disregards programme characteristics) and complement it with quantitative and qualitative information from our own field studies (hereafter referred to as case studies) in Mauritius and Uruguay (Asenjo et al. 2019), and in Argentina, Colombia and Peru (ILO 2016).While most examples in the section come from upper middle-income countries, this does not imply that integration strategies are not applied in lower middle-income countries.In fact, as previously demonstrated, integration is prevalent in such countries.Therefore, the examples presented in this section show a bias in evaluation towards approaches implemented in higher-income countries, which requires addressing.
We organize our conclusions around three sets of enabling conditions: (i) correct identification and assured participation of target groups; (ii) quality of services and strong linkages between income support and ALMPs; and (iii) sufficient institutional capacity and financing. 11 As shown in section 3, institutional context is key to policy integration, which can be achieved through various institutional arrangements.Some architectures aim for a joint policy design, where ALMPs are designed to fit income support programmes administered jointly through dedicated agencies (e.g.one-stop shops such the ones implemented in Mongolia since 2012).These have the advantage of enabling greater policy integration but require stronger institutional capacity to coordinate between agents and the enhanced set of policy tools on offer.Conversely, some models aim to coordinate independent policies that already exist.While more flexible in terms of administration (e.g.ALMPs referral to income support programmes), the weaker level of integration in these models emphasizes the importance of enabling conditions.Within these two models, there is a range of architectures with varying degrees of flexibility in administering the integration of policies.Approaches with voluntary participation in activation measures may be easier to implement, but at the cost of lower take-up, whereas compulsory participation might raise take-up but requires greater institutional capacities.This section discusses these enabling conditions, contrasting them with the barriers that LMIC will need to overcome for effective policy integration.These conclusionssummarised in table 2could serve as the background for further research efforts.

Correct identification of target groups and assured participation
A major challenge for integrated approaches is how best to identify groups in need who would benefit the most from the interventions.Cash transfer programmes in LMIC often identify Integrating income and employment support 17 beneficiaries based on imperfect methods (Hanna and Olken 2018).Given the lack of incomeadministrative data on informal employees, eligibility is in many countries proxied according to the assets of a household (e.g.durable goods and number of rooms in the house).Analysing data from Peru and Indonesia, Hanna and Olken (2018) demonstrate that despite inclusion errors, targeting through these proxy methods is the preferable strategy.Proxy methods allow for an explicit focus on the poor, which could be considered more efficient than a broader approach benefiting a larger group of households (with lower average benefits).For example, the Uruguayan programme PANES, used a proxy-means test to target the poorest 20% of households.Not only did PANES reach a large part of the population (i.e.14%) (Asenjo et al. 2019), but the programme reduced the risk of poverty in the short term (Amarante et al. 2009).
When devising labour market policies with the goal of improving employability, governments face another dilemma: should they target the neediest individuals or those who are slightly less poor but possess greater potential to benefit from the intervention, such as those who are more job-ready?The empirical literature on this question is limited.In the case of micro-entrepreneurship programmes, evidence suggests that a certain level of previous experience and skills are necessary for households to benefit fully from such schemes.Meager (2020) aggregates the evidence on the distributional effects of seven microcredit randomized trials and finds that only individuals in the top 25th percentile of household outcomes (i.e.consumption, profit and revenues) have a conclusive probability of experiencing large positive impacts.This right-tail effect appears to be driven by households with previous business experience.Likewise, meta-regression analysis using 37 impact evaluation studies of entrepreneurship programmes in LMIC reveals that youth, higher-educated and urban beneficiaries benefit the most from programmes supporting self-employment.Programmes aimed at improving business knowledge and practice are also most effective for participants who already have their own businesses (Cho and Honorati 2014).More generally, Egger et al. (2022) assess the effects of targeting based on deprivation or based on the potential impact of cash transfer programmes.For Kenya, they find a trade-off between consumption and food security, whereby the most deprived households gain the most in terms of food security but the least in terms of consumption of other goods and services, while less deprived households make the largest gains overall.Therefore, targeting the most deprived is not always welfare-optimal, as it depends on the outcome of interest and redistributive preferences.This raises a deeper ethical concern about whether it is justifiable to prioritize the most advantaged within the poor, and whether essential needs such as food security should be weighed against other economic goals.
Even when programmes are targeted appropriately, it can be challenging to ensure targeted groups have the opportunity and incentives to benefit from an intervention (ILO 2016).The case study of Mauritius' unemployment insurance scheme shows that overly stringent eligibility criteria can reduce coverage of some target groups.While the programme is innovative in allowing unemployed individuals who have lost either a formal or informal job to participate, it requires individuals to have lost a full-time job that lasted at least six months to be eligible.This criterion proves more challenging for informal, young and female workers, thereby limiting their ability to join the scheme and take advantage of its activation options (Asenjo et al. 2019;Liepmann and Pignatti 2019).
Take up among eligible individuals can be encouraged by facilitating registration and bureaucratic procedures.Evidence from the case study of the Public Employment Service in Colombia shows a limited reach among eligible peoplevery few job matches are made through this service.This share is considerably higher in other countries: 3.8% in Brazil (ILO 2016); 9.4% on average in the EU (European Commission 2017); and 20% in Japan (OECD 2015).Excessive requirements for the use of these services and the unfriendliness of the electronic registration system, are thought to have either prevented or discouraged some Colombian jobseekers and employers from taking part (ILO 2016).Similarly, informal workers appear to have been Integrating income and employment support 19 reluctant to register for the unemployment benefit scheme of Mauritius, possibly because they preferred not to go on record and thereby raise questions about their past informal employment (Liepmann and Pignatti 2019).Another example, of a South African wage subsidy programme shows firms choosing not to participate due to the amount of bureaucracy entailed (Levinsohn et al. 2014).
Adjusting participation mechanisms to cater the needs of the targeted populations is another approach to increase take-up of policies among eligible individuals.Evaluation of the integrated approach adopted in Uruguay showed that having family responsibilities decreased the likelihood that cash transfer beneficiaries would self-select into accompanying activation programmes (Asenjo et al. 2019;Escudero, L opez Mourelo, and Pignatti 2020).Thus, integrated approaches need to be adapted to cater individual needs.For example, L opez Mourelo and Escudero (2017) and the underlying field study (ILO 2016) assess the effects of the Argentinian Seguro de Capacitaci on y Empleo, a set of ALMPs offered to beneficiaries of the prominent CCT programme, Plan Jefes y Jefas de Hogar Desocupados.The analyses illustrate that women were under-represented in the programme's activation components, while they were over-represented in the income support component tailored to individuals considered less job ready.According to the studies, providing childcare or grants for women with dependent children could enable the participation of women and reduce drop out in the activation component.Similarly, Kluve et al.'s (2019) meta-analysis of youth policies shows that transport allowances have a central role in boosting young workers' programme participation.Indeed, a transportation subsidy implemented in Ethiopia for young jobseekers to travel to the city centre to receive information about new jobs, had positive effects on employment probabilities and hours worked.
Conversely, an excessive degree of participation and abuse by certain beneficiaries can hinder a programme's ability to reach its intended participants.The evaluation of Construyendo Per u a public works programmeand its underlying case study (Escudero 2018a;ILO 2016) show that a meaningful proportion of beneficiaries participated multiple times, while others exceeded the maximum programme duration.Improved enforcement of targeting rules through proper monitoring, especially at the local level, could have prevented over participation and opened up opportunities for others.

Quality of services and strong linkages between income support and ALMPs
Whether integrated approaches are effective also depends on the quality of the support delivered, which is the basis for a stronger integration between policies.First, income support needs to be sufficiently generous to keep individuals out of poverty (Asenjo et al. 2019).Empirical evidence on the income support provided by PANES in Uruguay shows that sufficiently generous cash transfers are effective in mitigating the effects of a crisis and reducing the risk of poverty in the short term (Amarante et al. 2009); as well as improving some longer-term aspects, including health outcomes of participants (Amarante et al. 2016).
Meanwhile, unemployment benefits often replace a share of previous income, where the associated replacement rates decline with time spent in unemployment, to encourage beneficiaries to actively job search (Boeri and van Ours 2014).However, a steep decline in the income replacement rate could push beneficiaries and their dependents into poverty.This was evidenced by the Mauritian unemployment scheme, where benefits replace only 30% of initial wages after six months of unemployment (Asenjo et al. 2019).A similarly low final replacement rate exists in many LMIC, whereas benefits in high-income countries tend to decline less drastically (Asenjo and Pignatti 2019).Algeria is an exception to this trend with a replacement rate above 50% after two years of unemployment.Moreover, unemployment benefits in LMIC are typically calculated without taking family circumstances, such as the number of children into consideration (Asenjo and Pignatti 2019), although implementing a customized approach could assist in poverty reduction and cost optimization.
Empirical analyses point also to the importance of increasing beneficiaries' attachment to the ALMPs provided under an integrated approach.To achieve this, regular reporting and follow-up meetings with caseworkers can be an effective approach.For example, individuals participating in a micro-entrepreneurship programme in Chile benefitted from such meetings to discuss their business performance and receive managerial advice (Mart ınez, Puentes, and Ruiz-Tagle 2018).In Tunisia, micro-entrepreneurs received personalized coaching to develop a business plan and access funding, which also proved effective (Almeida et al. 2012).
Public employment services play a central role in enhancing the connection between beneficiaries and ALMPs.This starts with a careful initial assessment of a jobseeker's background and interests, ideally through case management.Caseworkers provide individualized support over an extended period, encompassing a detailed analysis of a worker's needs and competencies, job-search support, and guidance in choosing and participating in ALMPs, with a view to fostering longer-term career development.Such all-encompassing approach to labour intermediation is more commonly observed in high-income countries, although there are examples in middle-income contexts (Mazza 2017(Mazza , 2013)).In Azerbaijan, Bahrain, Chile and Thailand, jobseekers are required to meet with caseworkers once or twice a month (Asenjo and Pignatti 2019).Furthermore, a recent regional initiative in Latin America has underscored the importance of enhancing access and efficiency of these services in response to the current migration crisis in the region (ILO and UNDP 2021).The case study of Mauritius also advocates for the Public Employment Service to collaborate with beneficiaries during their programme participation, ensuring that they fulfil programme requirements (Asenjo et al. 2019).Yet, most LMIC lack comprehensive labour intermediation services.
How these services are provided also matters.The impact assessment of the Colombian Agencia P ublica de Empleo shows that the effectiveness of benefits accrues when services are delivered face-to-face instead of online (ILO 2016;Pignatti Morano 2016).However, online provision can be a way of reducing costs and widening the reach of services to remote areas with good internet coverage and basic digital literacy among the local population.This is the case of Sweden, where public employment services rely heavily on online services (e.g.video meetings, webinars and so on).In LMIC, while face-to-face counselling, coupled with standardized workshops, remains a central component of core public employment services (Mazza 2013(Mazza , 2017)), there is a move towards online provision (including in Colombia), primary due to the distance between participants and public employment service centres (ILO 2016).Understanding the implied trade-offs is thus important.
Strengthening the attachment of beneficiaries to ALMPs may involve improving programme content and delivery.Our case studies of Peru and Uruguay illustrate that extended participation in public works programmes until jobseekers have found a job might be beneficial, especially since benefits are short lived (Asenjo et al. 2019;ILO 2016).This is in line with a meta-study of Latin America and the Caribbean countries that finds that ALMPs are more effective when participation exceeds four months in duration (Escudero et al. 2019).Moreover, beyond the question of duration, content matters, too.Two studies on Nicaragua and Sri Lanka showed that training schemes that were combined with income support were successful in improving participants' outcomes (de Mel, McKenzie, and Woodruff 2014;Macours, Premand, and Vakis 2012).However, such positive effects were not found for a programme in Colombia, where beneficiaries' attachment to the training scheme was weak (Medina, N uñez, and Tamayo 2013).In order for training to be effective, it requires an adequate skills content, provided with sufficient intensity and taking into consideration participants' profiles (as shown by case studies on Uruguay; see Escudero, L opez Mourelo, and Pignatti 2020).Moreover, contextual factors matter for programme effectiveness (Escudero et al. 2019;Kluve et al. 2019).The field study of Construyendo Per u posits that the likelihood of finding a job following participation depended also on whether its capacity-building aspects were fitted to the productive needs of the local labour market (ILO 2016).

Integrating income and employment support 21
Finally, if the quality of the ALMP component is good and it is successful in promoting employment, but the incentives and monitoring systems are ineffective, it may be necessary to make participation mandatory.The case of Norway shows that combining generous income support with mandatory participation in well-tailored ALMPs was decisive in substantially raising employment rates among participants, who at the outset faced significant labour market difficulties (Markussen and Røed 2016).The case study of PANES in Uruguay also indicates that mandatory ALMP participation for job-ready beneficiaries can improve a programme's effectiveness (Asenjo et al. 2019).Likewise, the Argentinian case study showed that the slow transition from income support to the activation components of Seguro de Capacitaci on y Empleo was largely due to participation being voluntary, and because income support continued (though with lower benefit levels) for recipients choosing not to participate in the activation components (ILO 2016; L opez Mourelo and Escudero 2017).

Sufficient institutional capacity and financing
Combining policies under single frameworks and then implementing them properly entails complex administrative procedures and sizable funding.It includes the identification and outreach to beneficiaries, the monitoring of ALMP participation, and the timely transfer of financial support.It can also involve complex coordination across the different ministries concerned (Escudero and Liepmann 2020;Mazza 2017).At the regional and sectoral levels, there likewise needs to be sufficient institutional capacity for administering allocated resources and dealing with the more technical aspects of policies (Asenjo et al. 2019;ILO 2016).For example, the case studies of Argentina and Peru show that insufficient institutional capacity at the local level limits the reach and effectiveness of programmes.To counteract this, the Argentinian Ministry of Labour developed a municipality-level network of public employment services through which it deployed effectively the Seguro de Capacitaci on de Empleo by providing help with job searches and counselling, and expanding training services.However, this effort was not spread evenly throughout all areas of the country (Madoery 2011), leaving many eligible people without an option to join the programme.Similarly, in the case of Construyendo Per u, lack of monitoring at the local level made overuse of services among a group of participants possible.This is closely related to a deeper problem of insufficient allocation of resources to labour programmes in Peru (Cerutti et al. 2014).
Sufficient funding is another driver of the integrated approach's effectiveness.As shown by macro-econometric analyses, in most countries current investments are below what is required for optimal implementation (Pignatti and Van Belle 2018).The need for sufficient financial investment is a major structural challenge outside of high-income countries (Samans 2021).However, inaction can be costly, as it implies that later on, even more expensive actions are required to counterbalance the adverse economic and societal consequences (for a similar argument, see Sachs 2015).In countries with a long tradition of integrated social protection policies that include ALMPs, such as European countries, this cost of inaction is more evident.The failure to invest in employability-enhancing policies (i.e.ALMPs), in these countries results in higher unemployment insurance and unemployment assistance.It has been documented that these costs exceed those of the most expensive ALMP (usually a high-quality training programme)for example, in France, the ratio of unemployment benefits to training costs for the unemployed is around 4:1 (Escudero 2018b).From this perspective, effectively implementing ALMPsin combination with income supportis a cost-efficient solution.
In countries without a universal social protection system for the unemployed, and where workers often transition into informal, low-quality jobs, the direct opportunity cost of not investing in ALMPs may not be immediately apparent from a fiscal standpoint.Nevertheless, the long-term negative consequences of perpetuated poverty, informality and low-quality jobs imply significant economic and societal costs.The recent migration crisis in LMICs has made the cost of inaction apparent, as the economic integration of migrants in their host country is a crucial condition for a sustainable migration (Dustmann et al., 2017).To the extent that participants transition into quality employment, integrated approaches can partially recover implementation expenses over time through the reduction in cash transfers.Additionally, they can help mitigate the negative consequences that recessions have for labour markets (Escudero 2018b). 12Policies that work to break poverty traps increase individuals' capacity to work, stimulate local economies and enable risky investments with long-term positive returns (see the discussion in Banerjee et al. 2017).ALMPs can also be tailored to the demographic characteristics and income situations of recipients, resulting in reduced implementation costs, while retaining policy effectiveness.

Conclusions
This paper has discussed the conceptual basis for understanding why it is beneficial to integrate income and employment support, focusing on LMIC.In contrast to European social protection schemes in the 1990s, which limited the right to income support and shifted the focus onto incentives to work and away from employment quality; our paper is based on more recent policy integration concepts that have evolved substantially from the original activation approach.It focuses on fostering complementarities between income support and ALMPs.While these recent concepts are still the subject of an academic debate, they are advocated by various academics and international organizations, including the ILO, the World Bank, the OECD, FAO and ECLAC, though with some differences in underlying rationale (see Asenjo et al. 2022).
The central argument of our paper is that, from a theoretical perspective, income support schemes and ALMPs yield positive effects when implemented jointly.To support this claim, we have discussed theoretical expectations with respect to policy effects on five labour market dimensions: labour demand, labour supply, quality of matching, in-work poverty reduction, and work quality.In short, by protecting workers' incomes, cash transfers and unemployment insurance schemes mean that workers do not have to accept the first low-quality job that becomes available, thereby allowing them to search more intensely (and usually longer) for better jobs.Meanwhile, ALMPs assist workers in their job search, create new employment opportunities and increase workers' employability through human capital accumulation.This helps improve workers' labour market outcomes in the longer term.This examination has also revealed how theoretical expectations differ between LMIC and high-income countries.Given how widespread informal and low-productivity employment is in LMIC, the effect of policies on the quality of work (including in-work poverty) is particularly pertinent for those countries, whereas extended periods of unemployment are less of a concern.
Empirically, a growing body of literature evaluates the impact of integrated policies.While many of these studies find positive effects across labour market dimensions, this is clearly not always the case.This points to a discrepancy between empirical findings and the positive theoretical expectations outlined.Understanding how to reconcile this discrepancy is fundamental as many countries are implementing integrated approaches that vary substantially in their implementation characteristics.
To shed light on this discrepancy, we concluded the paper by examining which design and implementation characteristics determine a programme's success.Building on the existing literature and our own field work, we have identified and examined three enabling conditions: (i) correct identification of target groups and their assured participation; (ii) quality of service and strong linkages between income support and ALMPs; and (iii) sufficient institutional capacity and financing.These conclusions are based on various pieces of empirical evidence.We have incorporated quantitative and qualitative information from our field studies, because programme design and implementation characteristics are often not at the core of empirical research and therefore analysed only in passing.This highlights that more research identifying the causal effects of policy characteristics would be desirable.
Integrating income and employment support 23

Figure 1 .
Figure 1.ALMPs included in cash transfer schemes, by country and type of measure.Source: Asenjo et al. (2019).See the Supplementary Material for details on the data and methods.ALMPs stand for Active Labour Market Policies.

Figure 2 .
Figure 2. Mandatory ALMPs included in unemployment protection schemes, by country and type of measure.Source: Asenjo et al. (2019).See the Supplementary Material for details on the data and methods.ALMPs stand for Active Labour Market Policies.

Table 2 .--
Enabling conditions, barriers preventing their realisation and the facilitating factors put forward in this paper Barriers to be tackled in LMICs Facilitating factors that have shown effective results Enabling condition 1: Correct identification of target groups and assured participation -Proxy-means tests are costly and may entail imperfections in targeting -Employability-enhancing measures have a tradeoff between targeting the most vulnerable and those most able to benefit from the intervention -Targeting policies through proxy-means tests is the preferable strategy, despite imperfections -Low take-up of interventions, even when targeted appropriately Avoid overly strict eligibility criteria -Facilitate registration and reduce bureaucratic procedures -Adapt participation mechanisms to the needs of the populations targeted (e.g.childcare grants, transport allowances) -Awareness campaigns to promote participation -Excessive participation (abuse of the intervention) Appropriate monitoring of targeting rules at the local level Enabling condition 2: Quality of services and strong linkages between income support and ALMPs -Low quality of services provided -Sufficiently generous income support to keep individuals out of poverty during participation -Provision of services in line with country's realities.Online services need to be coupled with face-to-face counselling provided at the local level -Individualised support provided over a sufficiently extended period -Weak attachment of income support beneficiaries to ALMPs -Regular reporting and follow-up meetings with participants; case management through public employment services -Comprehensive offer of ALMPs -Sometimes incentives and monitoring are not enough to promote participation.In such cases, mandatory participation in ALMPs may be required Enabling condition 3: Sufficient institutional capacity and financing -Insufficient institutional capacity to combine and administer policies under a single framework -Set up one-stop shops to enable greater integration -Increase capacity to identify and contact beneficiaries of ALMPs and monitor participation -Choose a more flexible integration architecture -Difficulty coordinating separate ALMPs and income support schemes -Reinforce administrative capacity at the local level to complement national efforts -Set up coordination agencies -Ensure appropriate referral of income support beneficiaries to existing ALMPs -Excessive cost of the intervention -Tailor the support based on demographic characteristics and income situations of individuals and their households -Internalizing the external cost of inaction in terms of poverty, informality and unproductive employment Note: Authors' compilation.

Table 1 .
Expected theoretical effects of single and integrated policies by cluster.Effects post-participation unless stated otherwise