Working Paper: CEPR ID: DP9066
Authors: Pieter A. Gautier; Paul Muller; Michael Rosholm; Michael Svarer; Bas van der Klaauw
Abstract: Randomized experiments provide policy relevant treatment effects if there are no spillovers between participants and nonparticipants. We show that this assumption is violated for a Danish activation program for unemployed workers. Using a difference-in-difference model we show that the nonparticipants in the experiment regions find jobs slower after the introduction of the activation program (relative to workers in other regions). We then estimate an equilibrium search model. This model shows that a large scale role out of the activation program decreases welfare, while a standard partial microeconometric cost-benefit analysis would conclude the opposite.
Keywords: externalities; indirect inference; job search; policy-relevant treatment effects; randomized experiment
JEL Codes: C21; E24; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Danish activation program participants (J68) | Danish activation program nonparticipants in treatment regions (J68) |
| Danish activation program participants (J68) | job finding rates (J68) |
| Danish activation program nonparticipants in treatment regions (J68) | job finding rates (J68) |
| Danish activation program (J68) | job finding rates (J68) |