Market Tightness Invariance

Download image · 1200 × 630 PNG

In Simple Words

Imagine a job fair where event organizers add new job seekers and new employer booths at equal rates. Because the average line length at each booth stays identical, uninvited job seekers standing in line face the exact same odds of getting hired as before the event started.

Research question

Field experiments evaluating active labor market policies risk spillover contamination if the intervention significantly shifts the ratio of open job vacancies to job seekers (market tightness), altering control group matching probabilities.

Participants

N = 1,842 youth applicants and 731 firms across 7 urban areas in Côte d'Ivoire.

Study Design

Matching model estimating market tightness shift $\theta_1 - \theta_0 = (\omega - \psi)\frac{N_{form}}{A_s + A_d}$ under double-sided randomization.

Results

Supply-side windfall ($\omega = 0.259$) and demand-side substitution ($\psi = 0.227$) were nearly equal ($\omega - \psi = 0.032$), and program scale relative to the broader labor market was under 10% (9.9% mean ratio), resulting in near-zero market tightness adjustment and validating control group spillover independence.

Takeaway

Structure multi-sided interventions so supply-side participant withdrawals equal demand-side firm replacements to maintain stable market tightness and prevent control group spillover contamination.

Source and citation

See source →

Related findings