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

  • Bruno Crépon

    ()

    (CREST)

  • Esther Duflo

    ()

    (MIT)

  • Marc Gurgand

    ()

    (PSE & CREST)

  • Roland Rathelot

    ()

    (CREST)

  • Philippe Zamora

    ()

    (CREST)

This paper 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.

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Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2012-28.

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Length: 56
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:crs:wpaper:2012-28
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  1. Jochen Kluve & Lena Jacobi, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," RWI Discussion Papers 0041, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  2. David Card & Jochen Kluve & Andrea Weber, 2009. "Active Labor Market Policy Evaluations – A Meta-analysis," Ruhr Economic Papers 0086, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  3. Bergemann, Annette & van den Berg, Gerard J., 2006. "Active Labor Market Policy Effects for Women in Europe: A Survey," IZA Discussion Papers 2365, Institute for the Study of Labor (IZA).
  4. Pierre Cahuc & Thomas Le Barbanchon, 2009. "Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model," Working Papers hal-00396295, HAL.
  5. Emmanuel Saez & Esther Duflo, 2003. "The role of information and social interactions in retirement plan decisions: Evidence from a randomized experiment," Framed Field Experiments 00141, The Field Experiments Website.
  6. Lise, Jeremy & Seitz, Shannon & Smith, Jeffrey A., 2003. "Equilibrium Policy Experiments and the Evaluation of Social Programs," IZA Discussion Papers 758, Institute for the Study of Labor (IZA).
  7. 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.
  8. Camille Landais & Pascal Michaillat & Emmanuel Saez, 2013. "Optimal Unemployment Insurance over the Business Cycle," Discussion Papers 1303, Centre for Macroeconomics (CFM).
  9. Luc Behaghel & Bruno Crepon & Marc Gurgand, 2014. "Private and public provision of counseling to job seekers: evidence from a large controlled experiment," Working Papers 287666, Institut National de la Recherche Agronomique, France.
  10. Van der Linden, Bruno, 2005. "Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness," IZA Discussion Papers 1526, Institute for the Study of Labor (IZA).
  11. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
  12. Pascal Michaillat, 2010. "Do Matching Frictions Explain Unemployment? Not in Bad Times," CEP Discussion Papers dp1024, Centre for Economic Performance, LSE.
  13. 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, MIT Press, vol. 118(3), pages 815-842, August.
  14. Ferracci, Marc & Jolivet, Gregóry & van den Berg, Gerard J., 2010. "Treatment evaluation in the case of interactions within markets," Working Paper Series 2010:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  15. 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.
  16. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," IZA Discussion Papers 2018, Institute for the Study of Labor (IZA).
  17. 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.
  18. 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.
  19. 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.
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