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

  • Cahuc, Pierre
  • Le Barbanchon, Thomas

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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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 1 (January)
Pages: 196-205

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Handle: RePEc:eee:labeco:v:17:y:2010:i:1:p:196-205
Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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  11. Pierre Cahuc & François Fontaine, 2009. "On the efficiency of job search with social network," Post-Print hal-00395653, HAL.
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  16. Costas Meghir, 2006. "Dynamic models for policy evaluation," IFS Working Papers W06/08, Institute for Fiscal Studies.
  17. Masters, Adrian, 2000. "Retraining the Unemployed in a Model of Equilibrium Employment," Bulletin of Economic Research, Wiley Blackwell, vol. 52(4), pages 323-40, October.
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