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The Effect of Active Labor Market Programs on Not-Yet Treated Unemployed Individuals

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Author Info

  • van den Berg, Gerard J.

    ()
    (University of Mannheim)

  • Bergemann, Annette

    ()
    (University of Mannheim)

  • Caliendo, Marco

    ()
    (University of Potsdam)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3825.

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Length: 22 pages
Date of creation: Nov 2008
Date of revision:
Publication status: published in: Journal of the European Economic Association, 2009, 7(2-3), 606-616
Handle: RePEc:iza:izadps:dp3825

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Related research

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

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References

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  1. van den Bergh, Gerhard & van deer Klaauw, Bas, 2001. "Counseling and monitoring of unemployed workers: theory and evidence from a controlled social experiment," Working Paper Series 2001:12, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-76, November.
  3. Marco Caliendo & Sabine Kopeinig, 2005. "Some Practical Guidance for the Implementation of Propensity Score Matching," Discussion Papers of DIW Berlin 485, DIW Berlin, German Institute for Economic Research.
  4. van den Berg, Gerard J, 2007. "An Economic Analysis of Exclusion Restrictions for Instrumental Variable Estimation," CEPR Discussion Papers 6157, C.E.P.R. Discussion Papers.
  5. 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.
  6. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
  7. Berg, G.J. van den & Gorter, C., 1996. "Job search and commuting time," Serie Research Memoranda 0001, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  8. Jaap Abbring & Gerard van den Berg, 2005. "Social experiments and instrumental variables with duration outcomes," IFS Working Papers W05/19, Institute for Fiscal Studies.
  9. Berg, G.J. van den, 1987. "Nonstationarity in job search theory," Research Memorandum 242, Tilburg University, Faculty of Economics and Business Administration.
  10. repec:dgr:uvatin:2005047 is not listed on IDEAS
  11. Lalive, Rafael & van Ours, Jan C. & Zweimüller, Josef, 2002. "The Effect of Benefit Sanctions on the Duration of Unemployment," IZA Discussion Papers 469, Institute for the Study of Labor (IZA).
  12. Guido M. Imbens & Jeffrey M. Wooldridge, 2008. "Recent Developments in the Econometrics of Program Evaluation," NBER Working Papers 14251, National Bureau of Economic Research, Inc.
  13. Lancaster, Tony, 1985. "Simultaneous equations models in applied search theory," Journal of Econometrics, Elsevier, vol. 28(1), pages 113-126, April.
  14. 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.
  15. 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.
  16. 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.
  17. 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].
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Citations

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Cited by:
  1. 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).
  2. 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).
  3. 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.
  4. 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.
  5. Marco Caliendo & Armin Falk & Lutz C. Kaiser & Hilmar Schneider & Arne Uhlendorff & Gerard van den Berg & Klaus F. Zimmermann, 2011. "The IZA Evaluation Dataset: towards evidence-based labor policy making," International Journal of Manpower, Emerald Group Publishing, vol. 32(7), pages 731-752, November.
  6. Rafael Lalive & Michael Morlok & Josef Zweimüller, 2011. "Applying for jobs: Does ALMP participation help?," ECON - Working Papers 019, Department of Economics - University of Zurich.
  7. 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," IZA Discussion Papers 5485, Institute for the Study of Labor (IZA).
  8. 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.
  9. 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).
  10. Michael Lechner & Conny Wunsch & Patrycja Scioch, 2013. "Do Firms Benefit from Active Labour Market Policies?," CESifo Working Paper Series 4392, CESifo Group Munich.
  11. 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).
  12. 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.
  13. 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.

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