Estimating Equilibrium Effects of Job Search Assistance

Original source

Pieter Gautier; Paul Muller; Bas van der Klaauw; Michael Rosholm; Michael Svarer

Dated research draft · Version date: 16 July 2012

Permission for School’s use is unestablished.

Used in these cards

Activation Program Threat Effect

"Graversen and Van Ours (2008) find that the threat effect and job search assistance are most effective. ... They show that the effect of the activation program is largest for individuals with the longest travel time to the program location."

Ex-Post Bertrand Wage Competition in Labor Search

"In Bertrand competition workers with one offer receive their reservation wage or the minimum wage while workers with multiple offers receive the full match surplus."

Displacement Externalities in Active Labor Market Programs

"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)."

Disutility of Leisure and Wage Discipline Effect

"The activation program consists of meetings with caseworkers and a job search assistance program which are both time-consuming for participants. We assume that this eliminates the value of non-market time, h."

Dual Coordination Frictions in Application-Based Matching

"There are two coordination frictions affecting job finding: (i) workers do not know where other workers apply, and (ii) firms do not know which candidates are considered by other firms... More applications per worker reduce the first coordination problem mentioned above but amplify the second one."

Duration Dependence Bias in Treatment Intensity Calibration

"If we take into account that the exit rate declines during the spell of unemployment, the fraction of program participants among the stock of unemployed workers reduces to about 26 percent."

Endogenous Vacancy Supply Response

"The parameter estimates reported in column (3) show that indeed during the experiment the stock of vacancies started to increase in the experiment regions compared to other regions. This effect peaked in May/June, so three to four months after the random assignment stopped..."

Equilibrium Search Modeling via Indirect Inference

"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."

Indirect Inference Structural Estimation

"To estimate the structural model parameters, we use the method of indirect inference. The main idea is to use an auxiliary statistical model to capture features of the data, and to estimate the parameters of the structural model by matching the auxiliary parameters estimated from real data with those estimated from simulated data."

Leisure Cost Disutility in Mandatory Activation Programs

"The benefit of the program is that it reduces the costs of making job applications to $\gamma_{1}<\gamma_{0}$. ... The leisure costs of participating in the activation program are over one percent of productivity or almost two percent of the unemployment benefits level."

Local Labor Market Geographic Containment Assumption

"However, the Danish research council (2002) reports that within a year only one percent of the Danish unemployed and 1.4 percent of the employed workers move location."

Policy-Relevant Treatment Effect vs. Microeconometric Bias

"The evaluation of the randomized experiment estimates a treatment effect on the matching rates equal to 0.245-0.191=0.054... However, as we mentioned before the policy relevant treatment effect is E[m(a1*; a, θ)|τ=1]-E[m(a0*; a, θ)|τ=0], which is 0.208-0.205=0.003."

Stratified Partial Likelihood for Externality Identification

"The key advantage of stratified partial likelihood estimation is that it does not require any functional form restriction on the duration dependence pattern... The effect of the presence of the activation program on the nonparticipants in the program is a reduction in the exit rate of about five percent."

Urn-Ball Matching Function with Elastic Search Effort

"We model the matching process between workers and vacancies using an urn-ball matching function... this matching function microfounds the presence of congestion externalities among searchers."

Welfare Reversal in Large-Scale Policy Rollout

"A cost-benefit analysis indicates that government expenditures are minimized when about 30 percent of the workers participate in the activation program, while welfare is maximized when around 20 percent of the workers participate in the program."