In Simple Words
Think of a fisherman selling bait at a popular lake. If hundreds of anglers suddenly start fishing every morning with high-tech gear, fish are caught much faster, proving the lake is highly active. Seeing this surge in fishing activity and ease of filling orders, commercial boat owners decide to launch extra fishing charters because the chances of running a profitable trip have gone up.
Vacancies observed across Danish counties
- Counties without the trial
- Trend comparison group
- Counties with the activation trial
- Larger vacancy-stock rise
Regional model comparison, May and June 2006 peak. Counties were not randomly selected; the 0.182 estimate is a log change, not an exact 18.2% rise.
See source →Research question
Standard partial equilibrium evaluations assume that labor demand and firm job creation remain fixed when active labor market policies are implemented. In reality, firms respond dynamically to increased worker search effort and lower reservation wages by creating additional job vacancies in the local economy.
Participants
Monthly administrative vacancy data across 14 Danish counties from January 2004 to November 2007.
Study Design
Difference-in-differences regression model with county and month fixed effects evaluating log vacancy stocks before, during, and after the experimental activation period.
Results
Log vacancy stocks in experiment counties increased significantly, peaking at an 18.2% increase (p < 0.01) in May/June 2006 (3-4 months post-assignment), resulting in a projected 2.4% net increase in overall economy-wide vacancy supply under full program rollout.
Takeaway
Track aggregate monthly job opening postings following labor policy interventions to measure firm creation responses before concluding that job search assistance only reshuffles existing jobs.