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Unintended Displacement Effects of Youth Training Programs in a Directed Search Model

Author

Listed:
  • Marcos Gómez

    () (Universidad Adolfo Ibáñez)

  • Francisco Parro

    () (Universidad Adolfo Ibáñez)

Abstract

Abstract The rise in the productivity of inexperienced young workers suggests a positive partial equilibrium effect of youth training programs on employment. However, in a general equilibrium context, displacement effects that impact other groups of workers could also arise. We build a directed search model to study the unintended displacement effects of youth training programs. We calibrate the model to match data from the US labor market. The model is then used to simulate a policy experiment that resembles a training program that raises the productivity of a targeted group of low-skilled and inexperienced agents. Our counterfactual analysis shows that the policy indeed triggers displacement effects. Consequently, these unintended displacement effects must be taken into account in the evaluation of youth training programs.

Suggested Citation

  • Marcos Gómez & Francisco Parro, 2019. "Unintended Displacement Effects of Youth Training Programs in a Directed Search Model," Journal of Labor Research, Springer, vol. 40(2), pages 230-247, June.
  • Handle: RePEc:spr:jlabre:v:40:y:2019:i:2:d:10.1007_s12122-019-09284-1
    DOI: 10.1007/s12122-019-09284-1
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    Keywords

    Youth unemployment; Training programs; Directed search;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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