Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness

Bruno Van der Linden

No 2005007, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: This paper evaluates counselling programmes in an equilibrium matching model where workers are heterogeneous in skill levels. Job search effort, labour demand and wages are endogenous. When wages are bargained over, raising the effectiveness of or the access to counselling programmes pushes wages upwards and leads to lower search effort among nonparticipants. The effects of increasing the access of the low-skilled are evaluated numerically by enlarging sucessively the set of endogenous behaviours. Induced effects outweigh substantial positive micro effects on low-skilled employment when all ‘margins’ are taken into account. The inter-temporal utility of the low-skilled nevertheless increases because search effort declines. On the contrary, when the net wage of the low-skilled is a fixed proportion of the one bargained by the high-skilled, raising the access to counselling programmes has small positive effects on all criteria.

Keywords: Active programmes; labour market policies; evaluation; policy complementarities; wage bargaining; equilibrum unemployment; equilibrium search (search for similar items in EconPapers)
JEL-codes: J63 J64 J65 J68 (search for similar items in EconPapers)
Pages: 31
Date: 2005-03-01
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (13)

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Working Paper: Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness (2005)
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