Estimating equilibrium effects of job search assistance
Pieter Gautier
Paul Muller
Bas van der Klaauw
Michael Rosholm
Michael Svarer
July 2012
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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Last updated: July 16, 2012.