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Estimating Equilibrium Effects of Job Search AssistancePieter A. GautierFree University of Amsterdam; Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA) Paul Mulleraffiliation not provided to SSRN Bas Van der KlaauwVU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA); Tinbergen Institute Michael RosholmUniversity of Aarhus - Department of Economics; Institute for the Study of Labor (IZA); Amternes og Kommunernes Forskningsinstitut (AKF) Michael SvarerUniversity of Aarhus - Department of Economics; Institute for the Study of Labor (IZA) IZA Discussion Paper No. 6748 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.
Number of Pages in PDF File: 47 Keywords: randomized experiment, policy-relevant treatment effects, job search, externalities, indirect inference JEL Classification: C21, E24, J64 working papers seriesDate posted: July 28, 2012Suggested CitationContact Information
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