Estimating Equilibrium Effects of Job Search Assistance
Pieter A. Gautier
Free University of Amsterdam; Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA)
VU University Amsterdam; Tinbergen Institute
Bas Van der Klaauw
VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA); Tinbergen Institute
University of Aarhus - Department of Economics; Institute for the Study of Labor (IZA); Amternes og Kommunernes Forskningsinstitut (AKF)
University of Aarhus - Department of Economics; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 6748
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.
Number of Pages in PDF File: 47
Keywords: randomized experiment, policy-relevant treatment effects, job search, externalities, indirect inference
JEL Classification: C21, E24, J64working papers series
Date posted: July 28, 2012
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