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Does the public employment service affect search effort and outcomes?

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  • Fougère, Denis
  • Pradel, Jacqueline
  • Roger, Muriel

Abstract

In this paper, we examine the disincentive effects of the public employment service on the search effort of unemployed workers and on their exit rate from unemployment. For that purpose, we specify a structural search model with fixed and variable costs of search in which unemployed workers select their optimal search intensity given the exogenous arrival rate of job contacts coming from the public employment agency. Because the theoretical effect of an increase in this exogenous job contact arrival rate on the structural exit rate from unemployment is ambiguous, we estimate this model using individual unemployment duration data. Our results show that the exit rate from unemployment increases with the arrival rate of job contacts obtained by the public employment service, especially for low-educated and low-skilled workers. They also show that the search effort is more costly for low-educated women and low-skilled adult unemployed workers. This last result suggests that a public employment agency that matches searchers and employers is beneficial, in the sense that it saves searchers in terms of search costs they would otherwise bear.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 53 (2009)
Issue (Month): 7 (October)
Pages: 846-869

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Handle: RePEc:eee:eecrev:v:53:y:2009:i:7:p:846-869

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Keywords: Job search Search intensity Public employment agency Simulated maximum likelihood;

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Citations

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Cited by:
  1. Pieter Gautier & Paul Muller & Bas van der Klaauw & Michael Rosholm & Michael Svarer, 2012. "Estimating Equilibrium Effects of Job Search Assistance," Tinbergen Institute Discussion Papers 12-071/3, Tinbergen Institute.
  2. B. Cockx & M. Dejemeppe & A. Launov & B. Van Der Linden, 2011. "Monitoring, Sanctions and Front-Loading of Job Search in a Non-Stationary Model," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/761, Ghent University, Faculty of Economics and Business Administration.
  3. Jonas Maibom Pedersen & Michael Rosholm & Michael Svarer, 2012. "Experimental Evidence on the Effects of Early Meetings and Activation," Economics Working Papers 2012-26, School of Economics and Management, University of Aarhus.
  4. Gautier, Pieter A & Muller, Paul & Rosholm, Michael & Svarer, Michael & van der Klaauw, Bas, 2012. "Estimating equilibrium effects of job search assistance," CEPR Discussion Papers 9066, C.E.P.R. Discussion Papers.
  5. M. Deidda & A. Di Liberto & M. Foddi & G. Sulis, 2012. "Employment Subsidies, Informal Economy and Women’s Transition into Work in a Depressed Area: Evidence from a Matching Approach," Working Paper CRENoS 201216, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  6. Marco Caliendo & Deborah Cobb-Clark & Arne Uhlendorff, 2010. "Locus of Control and Job Search Strategies," Discussion Papers of DIW Berlin 979, DIW Berlin, German Institute for Economic Research.
  7. Michael White and Genevieve Knight, 2003. "Benchmarking the effectiveness of NDYP: A review of European and US literature on the microeconomic effects of labour market programmes for young people," PSI Research Discussion Series 10, Policy Studies Institute, UK.
  8. Muriel Dejemeppe & Bruno Van der Linden & Andrey Launov & Bart Cockx, 2011. "Monitoring and Sanctions in a Non-Stationary Structural Job-Search Model," 2011 Meeting Papers 501, Society for Economic Dynamics.

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