Unintended Displacement Effects of Youth Training Programs in a Directed Search Model

Marcos Gomez and Francisco Parro

Journal of Labor Research, 2019, vol. 40, issue 2, No 5, 230-247

Abstract: Abstract The rise in the productivity of inexperienced young workers suggests a positive partial equilibrium effect of youth training programs on employment. However, in a general equilibrium context, displacement effects that impact other groups of workers could also arise. We build a directed search model to study the unintended displacement effects of youth training programs. We calibrate the model to match data from the US labor market. The model is then used to simulate a policy experiment that resembles a training program that raises the productivity of a targeted group of low-skilled and inexperienced agents. Our counterfactual analysis shows that the policy indeed triggers displacement effects. Consequently, these unintended displacement effects must be taken into account in the evaluation of youth training programs.

Keywords: Youth unemployment; Training programs; Directed search (search for similar items in EconPapers)
JEL-codes: C78 E24 H53 J08 J64 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s12122-019-09284-1

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