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Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness

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Author Info
Bruno, VAN DER LINDEN (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

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Abstract

This paper evaluates counselling programmes in an equilibrium matching model where workers are heterogeneous in skill levels. Job search effort, labour demand and wages are endogenous. When wages are bargained over, raising the effectiveness of or the access to counselling programmes pushes wages upwards and leads to lower search effort among nonparticipants. The effects of increasing the access of the low-skilled are evaluated numerically by enlarging sucessively the set of endogenous behaviours. Induced effects outweigh substantial positive micro effects on low-skilled employment when all ÔmarginsÕ are taken into account. The inter-temporal utility of the low-skilled nevertheless increases because search effort declines. On the contrary, when the net wage of the low-skilled is a fixed proportion of the one bargained by the high-skilled, raising the access to counselling programmes has small positive effects on all criteria.

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Publisher Info
Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2005007.

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Length: 31
Date of creation: 04 Mar 2005
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Handle: RePEc:ctl:louvec:2005007

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Related research
Keywords: Active programmes; labour market policies; evaluation; policy complementarities; wage bargaining; equilibrum unemployment; equilibrium search;

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Find related papers by JEL classification:
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy

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References listed on IDEAS
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    Other versions:
  2. Chone, Philippe & Laroque, Guy, 2005. "Optimal incentives for labor force participation," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 395-425, February. [Downloadable!] (restricted)
    Other versions:
  3. Bruno, VAN DER LINDEN, 2003. "Unemployment insurance and training in an equilibrium matching model with heterogeneous agents," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
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  4. Muriel Dejemeppe, 2005. "A Complete Decomposition of Unemployment Dynamics using Longitudinal Grouped Duration Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 47-70, 02. [Downloadable!] (restricted)
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  7. Boone, Jan & van Ours, Jan C., 2004. "Effective Active Labor Market Policies," IZA Discussion Papers 1335, Institute for the Study of Labor (IZA). [Downloadable!]
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  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, vol. 2(4), pages 569-606, 06. [Downloadable!] (restricted)
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  9. 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. [Downloadable!]
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  10. Immervoll H, 2002. "The Distribution Of Average And Marginal Effective Tax Rates In European Union Member States," EUROMOD Working Papers EM2/02, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
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  13. Muriel Dejemeppe & Bart Cockx, 2005. "Duration dependence in the exit rate out of unemployment in Belgium. Is it true or spurious?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 1-23. [Downloadable!]
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  14. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2004. "Equilibrium Policy Experiments and the Evaluation of Social Programs," NBER Working Papers 10283, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Fredriksson, Peter & Holmlund, Bertil, 2001. "Optimal Unemployment Insurance in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 370-99, April. [Downloadable!] (restricted)
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  16. Martin, John P. & Grubb, David, 2001. "What works and for whom: a review of OECD countries' experiences with active labour market policies," Working Paper Series 2001:14, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
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  19. Cockx, Bart, 2003. "Vocational Training of Unemployed Workers in Belgium," IZA Discussion Papers 682, Institute for the Study of Labor (IZA). [Downloadable!]
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  23. Cahuc, Pierre & Lehmann, Etienne, 2000. "Should unemployment benefits decrease with the unemployment spell?," Journal of Public Economics, Elsevier, vol. 77(1), pages 135-153, July. [Downloadable!] (restricted)
  24. Lehmann, Etienne & Van der Linden, Bruno, 2004. "On the Optimality of Search Matching Equilibrium When Workers Are Risk Averse," IZA Discussion Papers 1172, Institute for the Study of Labor (IZA). [Downloadable!]
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  25. Barbara Petrongolo & Christopher A. Pissarides, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June. [Downloadable!] (restricted)
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  26. repec:rus:hseeco:10108 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2005. "Equilibrium Policy Experiments and the Evaluation of Social Programs," Working Papers 1076, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  2. Gabriele, CARDULLO & Bruno, VANDERLINDEN, 2006. "Employment subsidies and substitutable skills : An equilibrium matching approach," Discussion Papers (ECON - Département des Sciences Economiques) 2006010, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
    Other versions:
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