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Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model

Author

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  • Pierre Cahuc

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, Center for Economic Research - CEPR, IZA - Institute for the Study of Labor)

  • Thomas Le Barbanchon

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, Unité de gestion de la direction de l'action régionale et des relations avec l'enseignement supérieur (DARES) - INRA - Institut National de la Recherche Agronomique)

Abstract

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 noncounseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.

Suggested Citation

  • 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.
  • Handle: RePEc:hal:wpaper:hal-00396295
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00396295
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    References listed on IDEAS

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    More about this item

    Keywords

    evaluation; equilibrium effect; labor market policy;
    All these keywords.

    JEL classification:

    • 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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