Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 22/2008: The Impacts of Labor Market Policies on Job Search Behavior and Post-Unemployment Job Quality

Simen Gaure, Knut Røed () and Lars Westlie
Additional contact information
Knut Røed: The Ragnar Frisch Centre for Economic Research, Postal: Gaustadallèen 21, N-0349 Oslo , Norway

Abstract: We examine empirically the impacts of labor market policies – in terms of unemployment insurance (UI) and active labor market programs (ALMP) – on the duration and outcome of job search and on the quality of a subsequent job. We find that time invested in job search tends to pay off in the form of higher earnings once a job match is formed. More generous UI raises expected unemployment duration, while improving the quality of the resultant job. Participation in ALMP raises the probability of finding a job and the level of expected earnings, but at the cost of lengthening job search.

Keywords: Multivariate hazards; job search; job quality; timing-of-events; NPMLE; MMPH

JEL-codes: C14; C15; C41; J64; J65; J68

34 pages, September 16, 2008

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