Optimal Use of Labor Market Policies: The Role of Job Search Assistance

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper studies the role of job search assistance programs in optimal welfare-to-work programs. The analysis is based on a framework, that allows for endogenous choice of benefit types and levels, wage taxes or subsidies, and activation measures such as monitoring and job search assistance for each period of unemployment in a dynamic environment with negative duration dependence in the exit rates to employment and potential depreciation in reemployment wages. We show that the main role of job search assistance is to delay or prevent situations in which it is no longer optimal to incentivize the worker to provide positive search effort. It is used to restore or maintain some minimum exit rate to employment which increases with the cost-effectiveness of job search assistance. We also find that in line with existing policies, these programs should mainly be used at the beginning of unemployment and for short durations. However, contrary to existing schemes, they should be exclusively targeted at unemployed workers with low initial exit rates to employment. For all other workers, they should only be used if they fail to find a job within reasonable time despite high expected initial exit rates. Terms of use: Documents inJEL-Code: J64, J65, J68, D82, D86.Keywords: job search, optimal unemployment insurance, welfare-to-work policies, recursive contracts. The author is also affiliated with CESifo, Munich. I thank Gerard van den Berg, Monika Bütler, Michael Lechner, Alan Manning, Blaise Melly, Fabio Trojani, Stephan Wiehler as well as anonymous referees and various seminar participants for helpful discussions and comments. I also thank Michael Lechner for providing some of his GAUSS procedures, adapted versions of which I used for some of the estimations. The usual disclaimer applies. Conny Wunsch Swiss Institute for Empirical Economic

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The Effect of Firms’ Phased Retirement Policies on the Labor Market Outcomes of Their Employees

“…In the following, we will use the terms "establishment" and "firm" interchangeably. 12 The social insurance records were also used, for example, by Wunsch and lechner (2008), lechner and Wunsch (2013), Wunsch (2013), and biewen, fitzenberger, Osikominu, and Paul (2014) but with a different sampling design. as to whether the firm offers PWe.…”

“…21 see, for instance, Mackinnon (2006) for a discussion of bootstrapping symmetric statistics. since the theoretical results by Abadie and Imbens (2006) and the simulation-based results in huber, lechner, and Wunsch (2013) suggested that the estimator is asymptotically normally distributed, bootstrapping the potentially pivotal t-statistic (computed under the assumption that the weights obtained to compute the control group are non-stochastic) has the advantage of potentially providing so-called asymptotic refinements and thus improving inference. We also checked the bootstrap distribution of the estimated effects directly (quantile method).…”

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