Does Job Search Assistance Reduce Unemployment? Experimental Evidence on Displacement Effects and Mechanisms

64 Pages Posted: 29 Jan 2020

See all articles by Maria Cheung

Maria Cheung

Stockholm University

Johan Egebark

Research Institute of Industrial Economics (IFN)

Anders Forslund

IFAU - Institute for Labour Market Policy Evaluation; Uppsala University

Lisa Laun

IFAU - Institute for Labour Market Policy Evaluation

Magnus Rodin

Stockholm University

Johan Vikström

Uppsala University; IFAU - Institute for Labour Market Policy Evaluation

Date Written: November 20, 2019

Abstract

This paper uses a large-scale two-level randomized experiment to study direct and displacement effects of job search assistance. Our findings show that the assistance reduces unemployment among the treated, but also creates substantial displacement leading to higher unemployment for the non-treated. By using detailed information on caseworker and job seeker behavior we show that vacancy referrals passed on from caseworkers to job seekers is the driving mechanism behind the positive direct effect. We also examine explanations for the displacement effect and show that displacement is not due to constrained resources, but arises in the labor market. A comparison between different meeting formats suggests that face-to-face meetings and distance meetings are more effective than group meetings. Despite the existence of displacement effects, when we incorporate our results into an equilibrium search model we find that a complete roll-out of the program would lead to lower unemployment and reduced government spending.

Keywords: vacancy referrals, counseling, job search, randomized experiment

JEL Classification: J68, J64, C93

Suggested Citation

Cheung, Maria and Egebark, Johan and Forslund, Anders and Laun, Lisa and Rodin, Magnus and Vikström, Johan, Does Job Search Assistance Reduce Unemployment? Experimental Evidence on Displacement Effects and Mechanisms (November 20, 2019). IFN Working Paper No. 1307, Available at SSRN: https://ssrn.com/abstract=3515935 or http://dx.doi.org/10.2139/ssrn.3515935

Maria Cheung

Stockholm University ( email )

Universitetsvägen 10
Stockholm

Johan Egebark (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Anders Forslund

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden
018 471 70 76 (Phone)

Uppsala University ( email )

Uppsala, SE-751 20
Sweden

Lisa Laun

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden
+46 (0)18 471 60 56 (Phone)

Magnus Rodin

Stockholm University ( email )

Universitetsvägen 10
Stockholm, Stockholm SE-106 91
Sweden

Johan Vikström

Uppsala University ( email )

Box 513
Uppsala, 751 20
Sweden

IFAU - Institute for Labour Market Policy Evaluation

Box 513
751 20 Uppsala
Sweden

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