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Labor market policy evaluation in equilibrium: Some lessons of the job search and matching model

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  • Cahuc, Pierre
  • Le Barbanchon, Thomas

Abstract

We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the non-counseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.

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  • Cahuc, Pierre & Le Barbanchon, Thomas, 2010. "Labor market policy evaluation in equilibrium: Some lessons of the job search and matching model," Labour Economics, Elsevier, vol. 17(1), pages 196-205, January.
  • Handle: RePEc:eee:labeco:v:17:y:2010:i:1:p:196-205
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    Cited by:

    1. Stylianos Sakkas, 2018. "The macroeconomic implications of the European Social Fund: An impact assessment exercise using the RHOMOLO model," JRC Working Papers on Territorial Modelling and Analysis 2018-01, Joint Research Centre (Seville site).
    2. Tom Krebs, 2014. "Labor Market Reform and the Cost of Business Cycles," 2014 Meeting Papers 1017, Society for Economic Dynamics.
    3. Torben M. Andersen & Michael Svarer, 2014. "The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market," Economica, London School of Economics and Political Science, vol. 81(321), pages 86-116, January.
    4. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2011. "What Can Active Labour Market Policies Do?," Papers EC1, Economic and Social Research Institute (ESRI).
    5. Bruno Crépon & Gerard J. van den Berg, 2016. "Active Labor Market Policies," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 521-546, October.
    6. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2015. "Evaluating search and matching models using experimental data," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-35, December.
    7. Krebs, Tom & Scheffel, Martin, 2016. "Labor Market Institutions and the Cost of Recessions," IZA Discussion Papers 10442, Institute of Labor Economics (IZA).
    8. Jeff Borland, 2014. "Dealing with unemployment: What should be the role of labour market programs?," Evidence Base, Australia and New Zealand School of Government, vol. 2014(4), pages 1-21, December.
    9. Goulas, Eleftherios & Zervoyianni, Athina, 2018. "Active labour-market policies and output growth: Is there a causal relationship?," Economic Modelling, Elsevier, vol. 73(C), pages 1-14.
    10. Gartner, Hermann & Rothe, Thomas & Weber, Enzo, 2019. "The quality-weighted matching function: Did the German labour market reforms trade of efficiency against job quality?," IAB Discussion Paper 201924, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. Philip Schuster, 2010. "Labor Market Policy Instruments and the Role of Economic Turbulence," University of St. Gallen Department of Economics working paper series 2010 2010-29, Department of Economics, University of St. Gallen.
    12. Pieter Gautier & Paul Muller & Bas van der Klaauw & Michael Rosholm & Michael Svarer, 2018. "Estimating Equilibrium Effects of Job Search Assistance," Journal of Labor Economics, University of Chicago Press, vol. 36(4), pages 1073-1125.
    13. Bruno Crépon & Esther Duflo & Marc Gurgand & Roland Rathelot & Philippe Zamora, 2013. "Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 531-580.
    14. McGuinness, Seamus & O'Connell, Philip J. & Kelly, Elish & Walsh, John R., 2011. "Activation in Ireland: An Evaluation of the National Employment Action Plan," Research Series, Economic and Social Research Institute (ESRI), number RS20.
    15. Launov, Andrey & Wälde, Klaus, 2014. "Thumbscrews for Agencies or Individuals? How to reduce unemployment," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100558, Verein für Socialpolitik / German Economic Association.
    16. Andrey Launov & Klaus Wälde, 2013. "Thumbscrews for Agencies or for Individuals? How to Reduce Unemployment," Working Papers 1307, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 01 Sep 2013.
    17. Moyen, Stéphane & Stähler, Nikolai, 2014. "Unemployment Insurance And The Business Cycle: Should Benefit Entitlement Duration React To The Cycle?," Macroeconomic Dynamics, Cambridge University Press, vol. 18(3), pages 497-525, April.
    18. Mariusz Zielinski, 2015. "Unemployment And Labor Market Policy In Visegrad Group Countries," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 10(3), pages 185-201, September.
    19. Andersson, Fredrik & Holzer, Harry J. & Lane, Julia & Rosenblum, David & Smith, Jeffrey A., 2013. "Does Federally-Funded Job Training Work? Nonexperimental Estimates of WIA Training Impacts Using Longitudinal Data on Workers and Firms," IZA Discussion Papers 7621, Institute of Labor Economics (IZA).
    20. Moyen, Stéphane & Stähler, Nikolai, 2009. "Unemployment insurance and the business cycle: prolong benefit entitlements in bad times?," Discussion Paper Series 1: Economic Studies 2009,30, Deutsche Bundesbank.
    21. Marwa Sahnoun & Chokri Abdennadher, 2018. "The assessment of active labor market policies: evidence from OECD countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 257-283, August.

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    More about this item

    Keywords

    Evaluation Job search counseling Matching model;

    JEL classification:

    • 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

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