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Estimating Equilibrium Effects of Job Search Assistance

Author

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  • Gautier, Pieter A.

    (Vrije Universiteit Amsterdam)

  • Muller, Paul

    (Vrije Universiteit Amsterdam)

  • van der Klaauw, Bas

    (Vrije Universiteit Amsterdam)

  • Rosholm, Michael

    (Aarhus University)

  • Svarer, Michael

    (Aarhus University)

Abstract

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 we 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.

Suggested Citation

  • Gautier, Pieter A. & Muller, Paul & van der Klaauw, Bas & Rosholm, Michael & Svarer, Michael, 2012. "Estimating Equilibrium Effects of Job Search Assistance," IZA Discussion Papers 6748, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6748
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    More about this item

    Keywords

    job search; policy-relevant treatment effects; randomized experiment; externalities; indirect inference;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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