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Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness

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  • Van der Linden, Bruno

    ()
    (IRES, Université catholique de Louvain)

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 successively the set of endogenous behaviours. Induced effects outweigh substantial positive micro effects on low-skilled employment when all `margins' 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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1526.

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Length: 32 pages
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1526

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Keywords: active programmes; labour market policies; evaluation; equilibrium search;

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References

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  1. Etienne LEHMANN & Bruno VAN DER LINDEN, 2002. "On the optimality of search matching equilibrium when workers are risk averse," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 2002023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers, Centre for Economic Performance, LSE dp0470, Centre for Economic Performance, LSE.
  3. Cockx, Bart & Van der Linden, Bruno & Karaa, Adel, 1996. "Active labour market policies and job tenure," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 1996026, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  4. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2005. "Equilibrium Policy Experiments and the Evaluation of Social Programs," Working Papers, Queen's University, Department of Economics 1076, Queen's University, Department of Economics.
  5. Blundell, Richard William & Costa Dias, Monica & Meghir, Costas & Van Reenen, John, 2003. "Evaluating the Employment Impact of a Mandatory Job Search Programme," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3786, C.E.P.R. Discussion Papers.
  6. Heckman, James, 2001. "Accounting for Heterogeneity, Diversity and General Equilibrium in Evaluating Social Programmes," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 111(475), pages F654-99, November.
  7. Bruno, CREPON & Muriel, DEJEMEPPE & Marc, GURGAND, 2005. "Counseling the unemployed : does it lower unemployment duration and recurrence ?," Discussion Papers (ECON - Département des Sciences Economiques), Université catholique de Louvain, Département des Sciences Economiques 2005034, Université catholique de Louvain, Département des Sciences Economiques.
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  11. 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), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 2003001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  12. 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, IFAU - Institute for Evaluation of Labour Market and Education Policy 2001:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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Citations

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Cited by:
  1. Gabriele, CARDULLO & Bruno, VANDERLINDEN, 2006. "Employment subsidies and substitutable skills : An equilibrium matching approach," Discussion Papers (ECON - Département des Sciences Economiques), Université catholique de Louvain, Département des Sciences Economiques 2006010, Université catholique de Louvain, Département des Sciences Economiques.
  2. Lise, Jeremy & Seitz, Shannon & Smith, Jeffrey A., 2003. "Equilibrium Policy Experiments and the Evaluation of Social Programs," IZA Discussion Papers 758, Institute for the Study of Labor (IZA).
  3. Bruno Crépon & Esther Duflo & Marc Gurgand & Roland Rathelot & Philippe Zamora, 2012. "Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment," Working Papers, Centre de Recherche en Economie et Statistique 2012-28, Centre de Recherche en Economie et Statistique.
  4. Pierre Cahuc & Thomas Le Barbanchon, 2009. "Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model," Working Papers, HAL hal-00396295, HAL.

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