Treatment Versus Regime Effects of Carrots and Sticks

Patrick Arni, Gerard J. van den Berg and Rafael Lalive

Journal of Business & Economic Statistics, 2022, vol. 40, issue 1, 111-127

Abstract: Public employment service (PES) agencies and caseworkers (CWs) often have substantial leeway in the design and implementation of active labor market policies for the unemployed, and they use policies to a varying extent. We estimate regime effects which capture how CW and PES affect outcomes through different policy intensities. These operate potentially on all forward-looking job seekers regardless of actual treatment exposure. We consider regime effects for two sets of programs, supporting (“carrots”) and restricting (“sticks”) programs, and contrast regime and treatment effects on unemployment durations, employment, and post-unemployment earnings using register data that contain PES and caseworker identifiers for about 130,000 job spells. Regime effects are important: earnings are higher in a PES if carrot-type programs are used more intensively and stick-type programs are used less intensively. Actual treatment effects on earnings have a similar order of magnitude as regime effects and are positive for participation in carrot-type programs and negative for stick-type treatments. Regime effects are economically substantial. A modest increase in the intended usage of carrots and sticks reduces the total cost of an unemployed individual by up to 7.5%.

Date: 2022
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Related works:
Working Paper: Treatment versus regime effects of carrots and sticks (2017)
Working Paper: Treatment Versus Regime Effects of Carrots and Sticks (2015)
Working Paper: Treatment versus Regime Effects of Carrots and Sticks (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jnlbes:v:40:y:2022:i:1:p:111-127

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DOI: 10.1080/07350015.2020.1784744

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