Do labor market policies have displacement effects? Evidence from a clustered randomized experiment

This resource reports the results from a randomized experiment intended to evaluation the direct and indirect (displacement) impacts of job placement assistance on the labor market outcomes of young, educated job seekers in France. A two-step design was used. In the first step, proportions of job seekers to be assigned to treatment (0%, 25%, 50%, 75% or 100%) were randomly selected for each of the 235 labor markets (e.g. cities) participating in the experiment. Then, in each labor market, eligible job seekers were randomly assigned to the treatment, following this proportion. After eight months, eligible, unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not. But these gains are transitory, and they appear to have come partly at the expense of eligible workers who did not benefit from the program, particularly in labor markets where they compete mainly with other educated works, and in weak labor markets. Overall, the program seems to have had very little net benefits.

Contents

• Abstract
• Introduction
• Institutional context and description of the program
• Background: Placement services in France
• Program description
• Conceptual framework
• Experimental design and data
• Experimental design
• Data
• Basic results: Program take-up and difference between treatment and control
• Participation and services received
• Preliminary results: Labor market outcomes
• Estimating externalities
• Unconstrained reduced form
• Pooled reduced form
• Heterogeneity: sector and labor market conditions
• Other outcomes and longer term results
• Instrumental variable estimates of program impact
• Conclusion
• References
• Figure 1: The impact of the policy
• Figure 2: Average employment rate, per group
• Table 1: Response rates
• Table 2: Summary statistics
• Table 3: Take-up and intermediate variables
• Table 4: Reduced form: Impact of program assignment and assignment probability
• Table 5: Reduced form: Impact of the program, accounting for externalities
• Table 6: Jobs with highest and lowest share of skilled job seekers
• Table 7: Heterogeneity of program effect by area and cohort
• Table 8: Long-term impact on employment outcomes, accounting for externalities
• Table 9: Long-term impact on earnings, accounting for externalities
• Table 10: Effect of the treatment, accounting for externalities
• Table 11: Heterogeneity of the effect of program participation, by area and cohort
• Appendix: Supplementary tables (not for publication)
• Table A.1: Summary statistics on initially unemployed individuals (or unknown status)
• Table A.2: Reduced form: Impact of the program accounting for externalities, by education level
• Table A.3: Reduced form: Impact of the program accounting for externalities for highly educated individuals, reweighting observations by the distribution of jobs sought by the other sex group
• Table A.4: Long-term impact on wages, accounting for externalities