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The effect of active labor market programs on not-yet treated unemployed individuals

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  • van den Berg, Gerard J.

    ()
    (VU University Amsterdam)

  • Bergemann, Annette

    (VU University Amsterdam)

  • Caliendo, Marco

    (IZA)

Abstract

Labor market programs may affect unemployed individuals' behavior before they enroll. Such ex ante effects are hard to identify without model assumptions. We develop a novel method that relates self-reported perceived treatment rates and job-search behavioral outcomes, like the reservation wage, to each other, among newly unemployed workers. Job search theory is used to derive theoretical predictions. To deal with effect heterogeneity and selectivity, the effects of interest are estimated by propensity score matching. We apply the method to the German ALMP system, using a novel data set including self-reported assessments of the variables of interest as well as an unusually detailed amount of information on behavior, attitudes, and past outcomes. We find that the system generates a negative ex ante effect on the reservation wage and a positive effect on search effort.

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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2008:26.

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Length: 20 pages
Date of creation: 15 Nov 2008
Date of revision:
Handle: RePEc:hhs:ifauwp:2008_026

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Keywords: Policy evaluation; reservation wage; search effort; expectations; unemployment duration; program evaluation; active labor market policy; identification;

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References

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  1. Caliendo, Marco & Kopeinig, Sabine, 2005. "Some Practical Guidance for the Implementation of Propensity Score Matching," IZA Discussion Papers 1588, Institute for the Study of Labor (IZA).
  2. Lalive, R. & Ours, J.C. van & Zweimüller, J., 2002. "The Effect of Benefit Sanctions on the Duration of Unemployment," Discussion Paper 2002-19, Tilburg University, Center for Economic Research.
  3. Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 2003. "Is the Threat of Reemployment Services More Effective Than the Services Themselves? Evidence from Random Assignment in the UI System," American Economic Review, American Economic Association, vol. 93(4), pages 1313-1327, September.
  4. Jaap H. Abbring & Gerard J. van den Berg, 2005. "Social Experiments and Instrumental Variables with Duration Outcomes," Tinbergen Institute Discussion Papers 05-047/3, Tinbergen Institute.
  5. Guido Imbens & Jeffrey Wooldridge, 2008. "Recent developments in the econometrics of program evaluation," CeMMAP working papers CWP24/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  6. van den Berg, Gerard J., 2007. "An Economic Analysis of Exclusion Restrictions for Instrumental Variable Estimation," IZA Discussion Papers 2585, Institute for the Study of Labor (IZA).
  7. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
  8. van den Berg, Gerard J, 1990. "Nonstationarity in Job Search Theory," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 255-77, April.
  9. Bernhard, Sarah & Hohmeyer, Katrin & Jozwiak, Eva & Koch, Susanne & Kruppe, Thomas & Stephan, Gesine & Wolff, Joachim, 2008. "Aktive Arbeitsmarktpolitik in Deutschland und ihre Wirkungen," IAB-Forschungsbericht 200802, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  10. Gerard J. van den Berg & Bas van der Klaauw, 2006. "Counseling And Monitoring Of Unemployed Workers: Theory And Evidence From A Controlled Social Experiment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 895-936, 08.
  11. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-76, November.
  12. Gerard van den Berg & Bas van der Klaauw, 2000. "Counseling and Monitoring of Unemployed Workers: Theory and Evidence from a Social Experiment," Econometric Society World Congress 2000 Contributed Papers 0972, Econometric Society.
  13. van den Berg, Gerard J & Gorter, Cees, 1997. "Job Search and Commuting Time," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(2), pages 269-81, April.
  14. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, vol. 71(5), pages 1491-1517, 09.
  15. Lancaster, Tony, 1985. "Simultaneous equations models in applied search theory," Journal of Econometrics, Elsevier, vol. 28(1), pages 113-126, April.
  16. Abbring, Jaap H & van den Berg, Gerard J, 2005. "Social experiments and intrumental variables with duration outcomes," Working Paper Series 2005:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  17. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 12 Feb 2014.
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Citations

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Cited by:
  1. Bergemann, Annette & Caliendo, Marco & van den Berg, Gerard J & Zimmermann, Klaus F, 2011. "The Threat Effect of Participation in Active Labor Market Programs on Job Search Behavior of Migrants in Germany," CEPR Discussion Papers 8295, C.E.P.R. Discussion Papers.
  2. Lechner, Michael & Scioch, Patrycja & Wunsch, Conny, 2013. "Do Firms Benefit from Active Labour Market Policies?," CEPR Discussion Papers 9642, C.E.P.R. Discussion Papers.
  3. Rafael Lalive & Michael Morlok & Josef Zweimüller, 2011. "Applying for jobs: Does ALMP participation help?," ECON - Working Papers 019, Department of Economics - University of Zurich.
  4. Hullegie, P.G.J., 2012. "Essays on health and labor economics," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5637283, Tilburg University.
  5. Crépon, Bruno & Ferracci, Marc & Jolivet, Grégory & van den Berg, Gerard J., 2010. "Analyzing the Anticipation of Treatments Using Data on Notification Dates," IZA Discussion Papers 5265, Institute for the Study of Labor (IZA).
  6. Caliendo, Marco & Falk, Armin & Kaiser, Lutz C. & Schneider, Hilmar & Uhlendorff, Arne & van den Berg, Gerard J. & Zimmermann, Klaus F., 2010. "The IZA Evaluation Dataset: Towards Evidence-Based Labor Policy-Making," IZA Discussion Papers 5400, Institute for the Study of Labor (IZA).
  7. Maibom Pedersen, Jonas & Rosholm, Michael & Svarer, Michael, 2012. "Experimental Evidence on the Effects of Early Meetings and Activation," IZA Discussion Papers 6970, Institute for the Study of Labor (IZA).
  8. Emil Mihaylov, 2011. "Evaluation of Subsidized Employment Programs for Long-Term Unemployed in Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 136-167.
  9. Brian Graversen & Brian Larsen, 2013. "Is there a threat effect of mandatory activation programmes for the long-term unemployed?," Empirical Economics, Springer, vol. 44(2), pages 1031-1051, April.
  10. Caliendo, Marco & Uhlendorff, Arne, 2010. "Determinanten des Suchverhaltens von Arbeitslosen: Ausgewählte Erkenntnisse basierend auf dem IZA Evaluationsdatensatz," IZA Discussion Papers 5379, Institute for the Study of Labor (IZA).
  11. Caliendo, Marco & Uhlendorff, Arne, 2011. "Determinanten des Suchverhaltens von Arbeitslosen : ausgewählte Erkenntnisse basierend auf dem IZA Evaluationsdatensatz (Determinants of the search behavior of the unemployed : selected results based," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(1/2), pages 119-125.
  12. Arni, Patrick & Caliendo, Marco & Künn, Steffen & Zimmermann, Klaus F., 2014. "The IZA Evaluation Dataset Survey: A Scientific Use File," IZA Discussion Papers 7971, Institute for the Study of Labor (IZA).
  13. Paolo Lucchino & Dr Richard Dorsett, 2013. "Young people's labour market transitions: the role of early experiences," NIESR Discussion Papers 11735, National Institute of Economic and Social Research.

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