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Title: Estimating equilibrium effects of job search assistance

Author(s): Pieter A. Gautier, Paul Muller, Michael Rosholm, Michael Svarer and Bas van der Klaauw

Publication Date: July 2012

Keyword(s): externalities, indirect inference, job search, policy-relevant treatment effects and randomized experiment

Programme Area(s): Labour Economics

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.

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Bibliographic Reference

Gautier, P, Muller, P, Rosholm, M, Svarer, M and van der Klaauw, B. 2012. 'Estimating equilibrium effects of job search assistance'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9066