The Effect of Active Labor Market Programs on Not-Yet Treated Unemployed Individuals

22 Pages Posted: 25 Nov 2008

See all articles by Gerard J. van den Berg

Gerard J. van den Berg

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Annette Bergemann

University of Bristol - Department of Economics; IZA Institute of Labor Economics; IFAU - Institute for Labour Market Policy Evaluation

Marco Caliendo

University of Potsdam; Institute for the Study of Labor (IZA)

Abstract

Labor market programs may affect unemployed individuals' behavior before they enroll. Such ex ante effects are hard to identify without model assumptions. We develop a novel method that relates self-reported perceived treatment rates and job-search behavioral outcomes, like the reservation wage, to each other, among newly unemployed workers. Job search theory is used to derive theoretical predictions. To deal with effect heterogeneity and selectivity, the effects of interest are estimated by propensity score matching. We apply the method to the German ALMP system, using a novel data set including self-reported assessments of the variables of interest as well as an unusually detailed amount of information on behavior, attitudes, and past outcomes. We find that the system generates a negative ex ante effect on the reservation wage and a positive effect on search effort.

Keywords: program evaluation, unemployment duration, expectations, search effort, reservation wage, policy evaluation, active labor market policy, identification

JEL Classification: J64, C21, D83, D84

Suggested Citation

van den Berg, Gerard J. and Bergemann, Annette and Caliendo, Marco, The Effect of Active Labor Market Programs on Not-Yet Treated Unemployed Individuals. IZA Discussion Paper No. 3825. Available at SSRN: https://ssrn.com/abstract=1305809 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Gerard J. Van den Berg (Contact Author)

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6132 (Phone)
+32 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Annette Bergemann

University of Bristol - Department of Economics ( email )

8 Woodland Road
Bristol BS8 ITN
United Kingdom

IZA Institute of Labor Economics

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

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden

Marco Caliendo

University of Potsdam ( email )

August-Bebel Strasse 89
Potsdam, 14482
Germany
+49(0)331/9773225 (Phone)
+49(0)331/9773210 (Fax)

HOME PAGE: http://www.uni-potsdam.de/en/empwifo/news.html

Institute for the Study of Labor (IZA) ( email )

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

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