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The Displacement Effect of Labour‐Market Programs: MONASH Analysis

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  • PETER B. DIXON
  • MAUREEN T. RIMMER

Abstract

A key question concerning labour‐market programs is the extent to which they generate jobs for their target group at the expense of others. This effect is measured by displacement percentages. We describe a version of the MONASH model designed to quantify the effects of labour‐market programs. Our simulation results suggest that: (i) labour‐market programs can generate significant long‐run increases in employment; (ii) displacement percentages depend on how a labour‐market program affects the income trade‐off faced by target and non‐target groups between work and non‐work; and (iii) displacement percentages are larger in the short run than in the long run.

Suggested Citation

  • Peter B. Dixon & Maureen T. Rimmer, 2006. "The Displacement Effect of Labour‐Market Programs: MONASH Analysis," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages 26-40, September.
    • Handle: RePEc:bla:ecorec:v:82:y:2006:i:s1:p:s26-s40
    DOI: 10.1111/j.1475-4932.2006.00330.x
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    References listed on IDEAS

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    1. Peter B. Dixon & Maureen T. Rimmer, 2003. "A New Specification of Labour Supply in the MONASH Model with an Illustrative Application," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(1), pages 22-40, March.
    2. Timothy J. Bartik, 2000. "Displacement and Wage Effects of Welfare Reform," Book chapters authored by Upjohn Institute researchers, in: David E. Card & Rebecca M. Blank (ed.),Finding Jobs: Work and Welfare Reform, pages 72-122, W.E. Upjohn Institute for Employment Research.
    3. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
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