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Do labor market policies have displacement effects? Evidence from a clustered randomized experiment.
  • Catalina Serra,
  • Philipp Eisenhauer,
  • Sebastian Becker
Catalina Serra
University of Bonn
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Philipp Eisenhauer
University of Bonn
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Sebastian Becker
University of Bonn
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Abstract

\citet*{Cr_pon_2012} use a large-scale randomized control trial to evaluate how effective are the Active Labor Market Policies when it comes to creating more employment among educated, young job seekers in France. The parameter of interest is the relationship between the direct impacts of assignment to participation and externalities, specifically displacement effects. They use data from public unemployment agencies, private counseling firms and follow-up surveys. The authors find evidence that the targeted individuals are helped but harm non-treated, meaning that the effects of the policy are overestimated when externalities are not taken into account, being the externalities more harmful during crises.