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Is Counseling Welfare Recipients Cost-Effective ? Lessons from a Random Experiment

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Author Info

  • Bruno Crépon

    ()
    (CREST and JPAL)

  • Marc Gurgand

    ()
    (Paris School of Economics, CREST and JPAL)

  • Thierry Kamionka

    ()
    (CREST-CNRS)

  • Laurent Lequien

    ()
    (DARES and CREST)

Abstract

Job-search counseling is a potentially desirable labor market policy because it reduces market frictions, but it is strongly work-intensive as it requires repeated individual contact between job-seeker and case worker. Although it has become widely used, little is known about its cost-efficiency. This paper uses an experiment where individuals who have been on welfare for more than two years in a French district were randomly allocated to a counseling firm. We show that the policy causal impact is to increase employment and decrease the amounts of welfare transfers paid to the beneficiaries. However, the effects are small relative to the cost charged by the providing firm. Therefore, the net public cost, accounting for gains in welfare transfer payment, remains larger than reason- able social values that can be attached to having a former welfare recipient on a job. Although this is true for the policy as a whole, as implemented in this experiment, there is significant heterogeneity. In particular, it is more efficient and more cost-effective on a population of limited seniority on welfare

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Bibliographic Info

Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2013-01.

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Length: 38
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:crs:wpaper:2013-01

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  1. Boone, J. & Fredriksson, P. & Holmlund, B. & Ours, J.C. van, 2001. "Optimal Unemployment Insurance with Monitoring and Sanctions," Discussion Paper 2001-85, Tilburg University, Center for Economic Research.
  2. van den Berg, Gerard J & van der Klaauw, Bas, 2001. "Counselling and Monitoring of Unemployed Workers: Theory and Evidence from a Controlled Social Experiment," CEPR Discussion Papers 2986, C.E.P.R. Discussion Papers.
  3. Card, David & Kluve, Jochen & Weber, Andrea, 2009. "Active Labor Market Policy Evaluations: A Meta-Analysis," IZA Discussion Papers 4002, Institute for the Study of Labor (IZA).
  4. Luis Centeno & Mário Centeno & Álvaro A. Novo, 2008. "Evaluating Job Search Programs for Old and Young Individuals: Heterogeneous Impact on Unemployment Duration," Working Papers w200806, Banco de Portugal, Economics and Research Department.
  5. repec:hal:wpaper:halshs-00590769 is not listed on IDEAS
  6. Bruno, CREPON & Muriel, DEJEMEPPE & Marc, GURGAND, 2005. "Counseling the unemployed : does it lower unemployment duration and recurrence ?," Discussion Papers (ECON - Département des Sciences Economiques) 2005034, Université catholique de Louvain, Département des Sciences Economiques.
  7. 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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Cited by:
  1. Crépon, Bruno & Duflo, Esther & Gurgand, Marc & Rathelot, Roland & Zamora, Philippe, 2012. "Do Labor Market Policies Have Displacement Effects? Evidence from a Clustered Randomized Experiment," CEPR Discussion Papers 9251, C.E.P.R. Discussion Papers.

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