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

30 Pages Posted: 14 Sep 2008

See all articles by Pierre Cahuc

Pierre Cahuc

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA); University of Angers - French National Center for Scientific Research (CNRS); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Thomas Le Barbanchon

Bocconi university; Centre for Economic Policy Research (CEPR)

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

Keywords: evaluation, equilibrium effect, labor market policy

JEL Classification: J64, J68

Suggested Citation

Cahuc, Pierre and Le Barbanchon, Thomas, Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model. IZA Discussion Paper No. 3687. Available at SSRN: https://ssrn.com/abstract=1267828 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Pierre Cahuc (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA) ( email )

106-112 Boulevard de l'Hopital
Paris Cedex 13, 75647
France
+33 1 4117 3717 (Phone)
+33 1 4117 3724 (Fax)

HOME PAGE: http://eurequa.univ-paris1.fr/membres/cahuc/

University of Angers - French National Center for Scientific Research (CNRS)

106-112 Boulevard de l'Hopital
75647 Paris Cedex 13
France
+33 4 44 07 82 06 (Phone)
+33 4 44 07 82 02 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Thomas Le Barbanchon

Bocconi university ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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