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

  • Cahuc, Pierre

    ()

    (Ecole Polytechnique, Paris)

  • Le Barbanchon, Thomas

    ()

    (CREST)

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

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3687.

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Length: 30 pages
Date of creation: Sep 2008
Date of revision:
Publication status: published in: Labour Economics, 2010, 17 (1), 196-205
Handle: RePEc:iza:izadps:dp3687
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  1. Heckman, James J & Lochner, Lance & Taber, Christopher, 1998. "General-Equilibrium Treatment Effects: A Study of Tuition Policy," American Economic Review, American Economic Association, vol. 88(2), pages 381-86, May.
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  16. Blundell, Richard William & Costa Dias, Monica & Meghir, Costas & Van Reenen, John, 2003. "Evaluating the Employment Impact of a Mandatory Job Search Programme," CEPR Discussion Papers 3786, C.E.P.R. Discussion Papers.
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