What Works for the Unemployed? Evidence from Quasi-Random Caseworker Assignments, with Anders Humlum and Jakob Roland Munch.
NBER working paper. Revise and Resubmit (2nd round), Journal of Political Economy.
Popular versions by Becker Friedman Institute and Rockwool Foundation Research Unit. In the media (in Danish): DFF Podcast, Danske A-kasser I, Danske A-kasser II , Information , Ugebrevet A4 , Altinget debat .
Abstract: This paper examines if active labor market programs help unemployed job seekers find jobs using a novel random caseworker instrumental variable (IV) design. Leveraging administrative data from Denmark, our identification strategy exploits that (i) job seekers are quasi-randomly assigned to caseworkers, and (ii) caseworkers differ in their tendencies to assign similar job seekers to different programs. Using our IV strategy, we find assignment to classroom training increases employment by 29% two years after initial job loss of compliers. This finding contrasts with the conclusion reached by ordinary least squares (OLS), which suffers from a negative bias due to selection on unobservables. The employment effects are driven by job seekers who complete the programs (post-program effects) rather than job seekers who exit unemployment upon assignment (threat effects), and the programs help job seekers change occupations. We show that job seekers exposed to offshoring – who tend to experience larger and more persistent employment losses – also have higher employment gains from classroom training. By estimating marginal treatment effects, we conclude that total employment may be increased by targeting training toward job seekers exposed to offshoring.
Job Search, Overoptimism and Statistical Profiling: Can Information Provision Improve Job Search Outcomes? with Nikolaj A. Harmon and Robert Mahlstedt.
Revise and resubmit, Economic Journal.
Abstract: We estimate the causal effect of a large-scale information provision policy targeting unemployed workers in Denmark. The policy aimed to correct overoptimistic beliefs about reemployment prospects. Identification is based on a regression discontinuity design leveraging age discontinuities in the policy’s statistical profiling tool. When unemployment insurance recipients are informed that they are at high risk of long-term unemployment, their likelihood of exiting unemployment increases significantly. These exits reflect two very distinct mechanisms however: for some jobseekers the information treatment encourages faster job finding, while for others, it discourages job search altogether and shifts them from unemployment into passive support schemes.
Firm Premia and Match Effects in Pay vs. Amenities, with Anders Humlum and Evan K. Rose
NBER working paper.
Popular version by Becker Friedman Institute
Abstract: This paper develops a new approach to measuring non-wage amenities and compensating differentials in the labor market. Using a survey of 20,000 job movers in Denmark, we elicit workers’ reservation wage to return to their previous jobs. Our sample contains a large, connected network of firms, enabling us to estimate firm-wide premia and match effects in amenity values. Overall, higher-paying firms provide slightly worse non-pay amenities. Although they provide better perks and flexibility, they also come with higher layoff risk, faster work pace, and greater stress. On average, moves to jobs offering 10% higher pay involve a 5% reduction in the value of amenities, with 0.7% attributable to firm-wide tradeoffs and the remainder attributable to match effects in pay and preferences. Using a rich search model, we quantify the role of amenities in labor market inequality while accounting for preference heterogeneity and endogenous mobility. Worse amenities at high-paying firms offset more than half of their wage advantage, and the within-worker variance in pay across firms overstates the variance in utility by 50%.
Resting projects
Caseworker Quality and Jobseeker Transitions Out of Unemployment