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Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment

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Listed author(s):
  • Bruno Crépon
  • Esther Duflo
  • Marc Gurgand
  • Roland Rathelot
  • Philippe Zamora

Abstract

This article reports the results from a randomized experiment designed to evaluate the direct and indirect (displacement) impacts of job placement assistance on the labor market outcomes of young, educated job seekers in France. We use a two-step design. In the first step, the proportions of job seekers to be assigned to treatment (0%, 25%, 50%, 75%, or 100%) were randomly drawn for each of the 235 labor markets (e.g., cities) participating in the experiment. Then, in each labor market, eligible job seekers were randomly assigned to the treatment, following this proportion. After eight months, eligible, unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not. But these gains are transitory, and they appear to have come partly at the expense of eligible workers who did not benefit from the program, particularly in labor markets where they compete mainly with other educated workers, and in weak labor markets. Overall, the program seems to have had very little net benefits. JEL Codes: J68, J64, C93. Copyright 2013, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/qje/qjt001
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Article provided by Oxford University Press in its journal The Quarterly Journal of Economics.

Volume (Year): 128 (2013)
Issue (Month): 2 ()
Pages: 531-580

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Handle: RePEc:oup:qjecon:v:128:y:2013:i:2:p:531-580
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Find related papers by JEL classification:
  • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
  • 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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  1. Luc Behaghel & Bruno Cr?pon & Marc Gurgand, 2014. "Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 142-174, October.
  2. David Card & Jochen Kluve & Andrea Weber, 2010. "Active Labour Market Policy Evaluations: A Meta-Analysis," Economic Journal, Royal Economic Society, vol. 120(548), pages 452-477, November.
  3. Landais, Camille & Michaillat, Pascal & Saez, Emmanuel, 2010. "Optimal Unemployment Insurance over the Business Cycle," CEPR Discussion Papers 8132, C.E.P.R. Discussion Papers.
  4. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2003. "Equilibrium Policy Experiments and the Evaluation of Social Programs," Working Papers 1012, Queen's University, Department of Economics.
  5. Davidson, Carl & Woodbury, Stephen A, 1993. "The Displacement Effect of Reemployment Bonus Programs," Journal of Labor Economics, University of Chicago Press, vol. 11(4), pages 575-605, October.
  6. repec:adr:anecst:y:2008:i:91-92:p:17 is not listed on IDEAS
  7. Matz Dahlberg & Anders Forslund, 2005. "Direct Displacement Effects of Labour Market Programmes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(3), pages 475-494, 09.
  8. Annette Bergemann & Gerard J. Van Den Berg, 2008. "Active Labor Market Policy Effects for Women in Europe - A Survey," Annals of Economics and Statistics, GENES, issue 91-92, pages 385-408.
  9. Esther Duflo & Emmanuel Saez, 2003. "The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 815-842.
  10. Pascal Michaillat, 2012. "Do Matching Frictions Explain Unemployment? Not in Bad Times," American Economic Review, American Economic Association, vol. 102(4), pages 1721-1750, June.
  11. Marc FERRACCI & Grégory JOLIVET & Gerard J van den Berg, 2009. "“Treatment Evaluation in the Case of Interaction Within Markets”," Working Papers 2009-22, Centre de Recherche en Economie et Statistique.
  12. Bruno, VAN DER LINDEN, 2005. "Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness," Discussion Papers (ECON - Département des Sciences Economiques) 2005007, Université catholique de Louvain, Département des Sciences Economiques.
  13. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, July.
  14. Bruno Crépon & Marc Gurgand & Thierry Kamionka & Laurent Lequien, 2013. "Is Counseling Welfare Recipients Cost-Effective ? Lessons from a Random Experiment," Working Papers 2013-01, Centre de Recherche en Economie et Statistique.
  15. Bruce D. Meyer, 1995. "Lessons from the U.S. Unemployment Insurance Experiments," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 91-131, March.
  16. Dolton, Peter & O'Neill, Donal, 1996. "Unemployment Duration and the Restart Effect: Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 106(435), pages 387-400, March.
  17. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers 37, RWI - Leibniz-Institut für Wirtschaftsforschung.
  18. 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.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. We need more experiments
    by René Böheim in Econ Tidbits on 2013-04-25 06:33:00
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