A Hiring Subsidy for Long-Term Unemployed in a Search Model with PES and Random Search
AbstractOur search model combines two search methods, the public employment service (PES) and random search. The separation rate is endogenous, the job matching process consists of three stages. In the first and the second respectively the short-term (STU) and the long-term unemployed (LTU) randomly search for a vacancy. In the last stage the PES matches registered jobseekers with registered vacancies. The LTU cause training costs and, during the training period, have a lower marginal product than the STU. The effects of the hiring subsidy and of profiling techniques to increase the effectiveness of the PES depend on the target group. For target groups, who have relatively low private search costs in comparison with their productivity, not only the hiring subsidy but also the job placement activities of the PES are counterproductive and reduce overall employment.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 113.
Date of creation: 04 Jun 2003
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More information through EDIRC
matching model; hiring subsidy; endogenous separation rate; active labour market policy; PES and search market;
Other versions of this item:
- Jahn, Elke J. & Wagner, Thomas, 2002. "A hiring subsidy for long-term unemployed in a search model with PES and random search," Discussion Papers 11, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-16 (All new papers)
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