DP9751 Structural Empirical Evaluation of Job Search Monitoring

Author(s): Gerard van den Berg, Bas van der Klaauw
Publication Date: November 2013
Keyword(s): active labor market policy, job duration, job mobility, multi-tasking, randomized social expe`riment., search channels, search effort, treatment, unemployment duration, wage
JEL(s): C31, C32, D82, D83, J62, J64, J65, J68
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9751

We structurally estimate a novel job search model with endogenous job search effort, job quality dispersion, and effort monitoring, taking into account that monitoring effects may be mitigated by on-the-job search and search channel substitution. The data are from a randomized experiment conducted in the Netherlands. They include registers of post-unemployment outcomes like wages and job mobility, and survey data on measures of search behavior. As such we are the first to study monitoring effects on post-unemployment outcomes. We find that the option to climb the job ladder reduces substitution between search channels during unemployment and compensates for adverse long-run effects of monitoring on wages. We use the structural estimates to compare monitoring to counterfactual policies against moral hazard, like re-employment bonuses and changes in the unemployment benefits path. Replacing monitoring by an over-all benefits reduction in a way that is neutral to the worker results in slightly smaller effects with lower administrative costs.