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Estimating Equilibrium Effects of Job Search Assistance

  • Pieter Gautier

    (Free, University, Amsterdam)

  • Paul Muller

    (Free, University, Amsterdam)

  • Bas van der Klaauw,

    (Free, University, Amsterdam)

  • Michael Rosholm

    (Department of Economics and Business, Aarhus University, Denmark)

  • Michael Svarer


    (Department of Economics and Business, Aarhus University, Denmark)

Randomized experiments provide policy relevant treatment effects if there are no spillovers between participants and nonparticipants. We show that this assumption is violated for a Danish activation program for unemployed workers. Using a difference-in-difference model e show that the nonparticipants in the experiment regions find jobs slower after the introduction of the activation program (relative to workers in other regions). We then estimate an equilibrium search model. This model shows that a large scale role out of the activation program decreases welfare, while a standard partial microeconometric cost-benefit analysis would conclude the opposite.

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Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2012-27.

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Length: 45
Date of creation: 08 Nov 2012
Date of revision:
Handle: RePEc:aah:aarhec:2012-27
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