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The Displacement Effect of Labour-Market Programs: Estimates from the MONASH Model

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  • Peter B. Dixon
  • Maureen T. Rimmer

Abstract

A key question concerning labour-market programs is the extent to which they generate jobs for their target group at the expense of others. This effect is measured by displacement percentages. We describe a version of the MONASH model designed to quantify the effects of labour-market programs. Our simulation results suggests that: (1) labour-market programs can generate significant long-run increases in employment; (2) displacement percentages depend on how a labour-market program affects the income trade-off faced by target and non-target groups between work and non-work; and (3) displacement percentages are larger in the short run than in the long run.

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Bibliographic Info

Paper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-154.

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Date of creation: Jul 2005
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Handle: RePEc:cop:wpaper:g-154

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Keywords: labour-market programs; displacement percentage; CGE modelling;

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  1. John Creedy & Guyonne Kalb & Hsein Kew, 2001. "The Melbourne Institute Tax and Transfer Simulator (MITTS)," Melbourne Institute Working Paper Series, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2001n16, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  2. Peter B. Dixon & Maureen T. Rimmer, 2003. "A New Specification of Labour Supply in the MONASH Model with an Illustrative Application," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(1), pages 22-40.
  3. Timothy J. Bartik, 1999. "Displacement and Wage Effects of Welfare Reform," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 66, Northwestern University/University of Chicago Joint Center for Poverty Research.
  4. Timothy J. Bartik, 2002. "Spillover Effects of Welfare Reforms in State Labor Markets," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 42(4), pages 667-701.
  5. Guyonne Kalb, 1998. "An Australian Model for Labour Supply and Welfare Participation in Two-Adult Households," Discussion Papers, University of New South Wales, Social Policy Research Centre 0082, University of New South Wales, Social Policy Research Centre.
  6. Boeters, Stefan & Böhringer, Christoph & Feil, Michael, 2002. "Taxation and unemployment: an applied general equilibrium approach for Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 02-39, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Piggott, John & Chapman, Bruce, 1995. "Costing the Job Compact," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 71(215), pages 313-28, December.
  8. 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, MIT Press, vol. 2(4), pages 569-606, 06.
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