Does job search assistance reduce unemployment? Experimental evidence on displacement effects and mechanisms

Författare: Maria Cheung, Och Johan Egebark, Och Anders Forslund, Och Lisa Laun , Och Magnus Rödin, Och Johan Vikström, Och

Publicerad i: Journal of Labor Economics (June 2023)

Sammanfattning av Working paper 2019:25

This paper uses a large-scale two-level randomized experiment to study direct and displacement e ffects 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 eff ect. We also examine explanations for the displacement e ffect and show that displacement is not due to constrained resources, but arises in the labor market. A comparison between di fferent 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 slightly reduced government spending.