Networks, Norms, and Non-market Subsidy

Hossain, M. Z. 2026. Networks, Norms, and Non-market Subsidy. Three essays on Public Policy. Economic studies 236. 140 pp. Uppsala: Department of Economics, Uppsala University. ISBN 978-91-506-3177-7.

Essay I: This paper provides the first causal evidence of peer-driven behavioral spillovers in public employment services (PES). Using rich Swedish administrative data from 2004–2018 and a difference-in-differences design exploiting caseworker moves across local PES offices, I show that caseworker's broader vacancy referral behavior (i.e., vacancy referrals outside a job seeker’s stated preferences) responds strongly to the local practice environment, particularly peer norms. Moving to an office with a 1 pp higher average broader-referral rate increases a caseworker’s own broader-referral propensity by 0.35 pp. I then examine how these practiceenvironment shocks of the movers (caseworkers) affect their job seekers; and I find that jobseekers' re-employment probability (within 180 days) reduces by 1.5 pp when their caseworkers are exposed to 10 pp higher broader referral environment. These findings are consistent with evidence from mandated broader-search policies (Van der Klaauw and Vethaak, 2022) and stand in contrast to settings where broader referrals are given as informational nudge (Belot et al.,2019, 2022). Taken together, the evidence shows that local peer norms are important and have consequences for job seekers’ reemployment prospects.

Essay II: This paper studies whether public employment services can mitigate occupational gender segregation by shaping job seekers' exposure to gender-atypical employment opportunities. Using rich administrative data from Sweden and quasi-random assignment of
job seekers to caseworkers based on date-of-birth rules, we causally identify the effects of caseworkers' gender non-stereotypicalness (with regard to vacancy referral) on job seekers' labor market outcomes. We show that exposure to more gender non-stereotypical caseworkers significantly increases reemployment probabilities and leads to persistent earnings gains lasting up to five years. Our findings highlight the role of labor market intermediaries in shaping occupational sorting and demonstrate that norm-challenging job-search assistance may improve the efficiency in the labor market.

Essay III: This paper provides the causal evaluation of a large-scale education subsidy program in Bangladesh that finances teacher salaries in non-government secondary schools. Using nationally representative data from 2012-2023 and a regression discontinuity design, it examines whether government-financed salary support improved student achievement and school participation. The results reveal no significant effects on passing rates, share of distinctions in public examinations, or teacher composition, suggesting that fiscal relief alone did not translate into improved learning outcomes. While the estimates indicate a modest increase in girls’ access to secondary schooling, the evidence remains too limited to support a strong conclusion. In addition, school outcomes appear broadly similar across regions with differing levels of poverty and educational corruption. The reform’s broader impact may have been constrained by the absence of changes in teaching personnel and, consequently, class sizes, as well as by weak accountability, limited performance incentives, and documented dissatisfaction among MPO teachers.

Keywords: job seekers, labor market policy, caseworkers, broader vacancy referrals, peer effects, occupational segregation, gender-norms, non-stereotypical vacancy referrals, secondary education, payroll subsidy