Structural empirical evaluation of job search monitoring
Summary of Working paper 2015:16
To evaluate search eﬀort monitoring of unemployed workers, it is important to take account of post-unemployment wages and job-to-job mobility. We structurally estimate a job search model with endogenous job search eﬀort by the unemployed along various search channels that deals with this. The data are from an experiment in the Netherlands in which the extent of monitoring is randomized. They include registers of post-unemployment outcomes like wages and job mobility, and survey data on measures of search behavior. As such we are the ﬁrst to study monitoring eﬀects on post-unemployment outcomes. Once employed, individuals have the opportunity to further improve their position by moving to better-paid jobs, and we ﬁnd that this reduces the extent to which monitoring induces substitution towards formal search channels in unemployment. In general, job mobility compensates for adverse long-run eﬀects of monitoring on wages. We use the structural estimates to compare monitoring to counterfactual policies against moral hazard, like re-employment bonuses and changes in the unemployment beneﬁts path. Replacing monitoring by an over-all beneﬁts reduction in a way that is neutral to the worker results in slightly smaller eﬀects with lower administrative costs.
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