Estimating Equilibrium Effects of Job Search Assistance

Identifying policy-relevant treatment effects from randomized experiments requires the absence of spillovers between participants and nonparticipants (SUTVA) or variation in observed treatment levels. We find that SUTVA is violated for a Danish activation program for unemployed workers. Using a diff...

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Bibliographic Details
Published in:Journal of labor economics 2018-10, Vol.36 (4), p.1073-1125
Main Authors: Gautier, Pieter, Muller, Paul, van der Klaauw, Bas, Rosholm, Michael, Svarer, Michael
Format: Article
Language:English
Subjects:
Cost benefit analysis
Economics
Employment policies
Equilibrium
externalities
indirect inference
Job hunting
job search
Labor economics
Nationalekonomi
policy relevant treatment effects
randomized experiment
Unemployed people
Welfare
Workers
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Summary:Identifying policy-relevant treatment effects from randomized experiments requires the absence of spillovers between participants and nonparticipants (SUTVA) or variation in observed treatment levels. We find that SUTVA is violated for a Danish activation program for unemployed workers. Using a difference-in-differences model, we show that nonparticipants in the experiment regions find jobs more slowly after the introduction of the program than workers in other regions. We estimate an equilibrium search model to identify the policy-relevant treatment effect. A large-scale rollout of the program is shown to decrease welfare, while a standard partial micro-econometric cost-benefit analysis concludes the opposite.
ISSN:0734-306X
1537-5307
DOI:10.1086/697513