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Labor market policy evaluation in equilibrium: Some lessons of the job search and matching model

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  • Cahuc, Pierre
  • Le Barbanchon, Thomas

Abstract

We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the non-counseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 1 (January)
Pages: 196-205

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Handle: RePEc:eee:labeco:v:17:y:2010:i:1:p:196-205

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Evaluation Job search counseling Matching model;

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  1. Carl Davidson & Stephen A. Woodbury, 1990. "The Displacement Effect of Reemployment Bonus Programs," Upjohn Working Papers and Journal Articles 90-02, W.E. Upjohn Institute for Employment Research.
  2. Pierre Cahuc & Fran�Ois Fontaine, 2009. "On the Efficiency of Job Search with Social Networks," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(3), pages 411-439, 06.
  3. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2003. "Equilibrium Policy Experiments and the Evaluation of Social Programs," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20032, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  4. Bruno Crépon & Muriel Dejemeppe & Marc Gurgand, 2005. "Counseling the Unemployed : Does it Lower Unemployment Duration and Recurrence ?," Working Papers 2005-23, Centre de Recherche en Economie et Statistique.
  5. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-33, December.
  6. J.D. Angrist & Guido W. Imbens & D.B. Rubin, 1993. "Identification of Causal Effects Using Instrumental Variables," NBER Technical Working Papers 0136, National Bureau of Economic Research, Inc.
  7. Costas Meghir, 2006. "Dynamic models for policy evaluation," IFS Working Papers W06/08, Institute for Fiscal Studies.
  8. van den Bergh, Gerhard & van deer Klaauw, Bas, 2001. "Counseling and monitoring of unemployed workers: theory and evidence from a controlled social experiment," Working Paper Series 2001:12, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  9. James Albrecht (Georgetown University), Gerard J. van den Berg (Free University Amsterdam), and Susan Vroman (Georgetown University), 2005. "The Knowledge Lift: The Swedish Adult Education Program that Aimed to Eliminate Low Worker Skill Levels," Working Papers gueconwpa~05-05-08, Georgetown University, Department of Economics.
  10. Boone, Jan & Fredriksson, Peter & Holmlund, Bertil & van Ours, Jan, 2002. "Optimal unemployment insurance with monitoring and sanctions," Working Paper Series 2002:21, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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  13. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2004. "Evaluating the Employment Impact of a Mandatory Job Search Program," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 569-606, 06.
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  16. Masters, Adrian, 2000. "Retraining the Unemployed in a Model of Equilibrium Employment," Bulletin of Economic Research, Wiley Blackwell, vol. 52(4), pages 323-40, October.
  17. Bruno, VAN DER LINDEN, 2005. "Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness," Discussion Papers (ECON - Département des Sciences Economiques) 2005007, Université catholique de Louvain, Département des Sciences Economiques.
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Citations

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Cited by:
  1. Fredrik Andersson & Harry J. Holzer & Julia I. Lane & David Rosenblum & Jeffrey Smith, 2013. "Does Federally-Funded Job Training Work? Nonexperimental Estimates of WIA Training Impacts Using Longitudinal Data on Workers and Firms," NBER Working Papers 19446, National Bureau of Economic Research, Inc.
  2. repec:dgr:uvatin:2012071 is not listed on IDEAS
  3. 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.
  4. Andrey Launov & Klaus Wälde, 2013. "Thumbscrews for Agencies or for Individuals? How to Reduce Unemployment," Working Papers 1307, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 01 Sep 2013.
  5. McGuinness, Seamus & O'Connell, Philip J. & Kelly, Elish & Walsh, John R., 2011. "Activation in Ireland: An Evaluation of the National Employment Action Plan," Research Series, Economic and Social Research Institute (ESRI), number RS20, September.
  6. Bruno Crépon & Esther Duflo & Marc Gurgand & Roland Rathelot & Philippe Zamora, 2012. "Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment," Working Papers 2012-28, Centre de Recherche en Economie et Statistique.
  7. Moyen, Stéphane & Stähler, Nikolai, 2009. "Unemployment insurance and the business cycle: prolong benefit entitlements in bad times?," Discussion Paper Series 1: Economic Studies 2009,30, Deutsche Bundesbank, Research Centre.
  8. Philip Schuster, 2010. "Labor Market Policy Instruments and the Role of Economic Turbulence," University of St. Gallen Department of Economics working paper series 2010 2010-29, Department of Economics, University of St. Gallen.
  9. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2011. "What Can Active Labour Market Policies Do?," Papers EC1, Economic and Social Research Institute (ESRI).

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