Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model

Pierre Cahuc (1, 2, 3, 4) , Thomas Le Barbanchon (2, 5)

1 X-DEP-ECO - Département d'Économie de l'École Polytechnique
2 CREST - Centre de Recherche en Économie et Statistique
3 Center for Economic Research
4 IZA
5 Unité de gestion de la direction de l'action régionale et des relations avec l'enseignement supérieur (DARES)

We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the noncounseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.

Mots clés: evaluation; equilibrium effect; labor market policy

Domaines: Economies et finances

Pierre Cahuc, Thomas Le Barbanchon. Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model. 2009. ⟨hal-00396295⟩