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Public employment service (PES) agencies and caseworkers (CWs) often have substantial leeway in the design and implementation of active labor market policies for the unemployed, and they use policies to a varying extent. We estimate regime effects which capture how CW and PES affect outcomes through different policy intensities. These operate potentially on all forward-looking job seekers regardless of actual treatment exposure. We consider regime effects for two sets of programs, supporting ("carrots") and restricting ("sticks") programs, and contrast regime and treatment effects on unemployment durations, employment, and post-unemployment earnings using register data that contain PES and caseworker identifiers for about 130,000 job spells. Regime effects are important: earnings are higher in a PES if carrot-type programs are used more intensively and stick-type programs are used less intensively. Actual treatment effects on earnings have a similar order of magnitude as regime effects and are positive for participation in carrot-type programs and negative for stick-type treatments. Regime effects are economically substantial. A modest increase in the intended usage of carrots and sticks reduces the total cost of an unemployed individual by up to 7.5%.

This paper investigates the role of biased health perceptions as a potential driving force of risky health behaviors. We define absolute and relative health perception biases, illustrate their measurement in surveys and provide evidence on their relevance. Next, we decompose the theoretical effect into its extensive and intensive margin: When the extensive margin dominates, people (wrongly) believe they are healthy enough to "afford" unhealthy behavior. Finally, using three population surveys, we provide robust empirical evidence that respondents who overestimate their health are less likely to exercise and sleep enough, but more likely to eat unhealthily and drink alcohol daily.

Country reports for Austria, France, Germany, Italy, Netherlands, Portugal, Spain, Slovakia, Sweden, Switzerland, United Kingdom, and the United States (153 Seiten)

Standard program evaluations implicitly assume that individuals are perfectly informed about the considered policy change and the related institutional rules. This seems not very plausible in many contexts, as diverse examples show. However, evidence on how incomplete information affects the size of measured treatment effects is broadly missing. We exploit a unique set of natural experiments to assess the importance of incomplete information in shaping policy effects. We compare different large-scale quasi-experiments on changing potential benefit duration (PBD) in unemployment insurance (UI). Thereby, we confront the benchmark case, in which individuals are fully informed about their different PBD levels, with cases in which job seekers experience a change of their benefit eligibility without being initially informed. However, in any of the considered cases they face exactly the same size of treatment: an increase or decrease of the PBD by 200 days. We identify the treatment effects around the threshold of age 25 where PBD rules change in the considered Swiss UI system. We find substantial differences in the treatment effects across cases with different information conditions on benefit levels. The differences can be rationalized by a model in which individuals invest different amounts of effort to acquire the necessary information. Quantifications of the impact of incomplete information on the PBD effects demonstrate the policy relevance of this usually ignored issue.

How effective are effort targets? This paper provides novel evidence on the effects of job search requirements on effort provision and labor market outcomes. Based on large-scale register data, we estimate the returns to required job search effort, instrumenting individual requirements with caseworker stringency. Identification is ensured by the conditional random assignment of job seekers to caseworkers. We find that the duration of un- and non-employment both decrease by 3% if the requirement increases by one monthly application. When instrumenting actual applications with caseworker stringency, an additionally provided monthly application decreases the length of spells by 4%. In line with theory, we further find that the effect of required effort decreases in the individual's voluntary effort. Finally, the requirement level causes small negative effects on job stability, reducing the duration of re-employment spells by 0.3% per required application. We find a zero effect on re-employment wages.

Summary report of three scientific studies; mandated by the Swiss State Secretariat for Economic Affairs (SECO), Bonn 2016 (100 pages)

Does introducing or abolishing a policy measure affect the eligible individuals in the same way - just with opposite signs or are the reform effects of moving to a more or less generous policy symmetric? This is an important question that standard program evaluation results cannot answer and policy designers may thus implicitly assume symmetry of the effects. To address this issue, it is necessary to have access to a specific policy shock, which preferably implies both positive and negative news to the target group. In this paper, we try to answer the proposed policy evaluation question with opposite signs by exploring a large-scale quasi-experiment in unemployment insurance with imperfectly informed UI claimers: Job seekers are confronted with either an upgrade or a downgrade of their benefit eligibility within their unemployment spell, without being initially fully informed about the change. They face, however, exactly the same size of treatment: an increase or decrease of the potential benefit duration (PBD) by 200 days. We first compare the treatment effects of these update cases with the reference case, in which individuals are fully informed about their PBD. We identify the treatment effect around the threshold of age 25 where PBD rules change in the Swiss UI system. We find substantial differences in the treatment effects across cases with different expectations on benefit change. This applies to job finding and earnings outcomes. Secondly, the effects are asymmetric both quantitatively and qualitatively. The differences are consistent with patterns of loss aversion or of consumption commitment behavior. We also show that policy uncertainty reinforces the job finding effect of a downgrade shock.

Public Employment Service (PES) agencies and caseworkers often have substantial leeway in the design and implementation of active labor market policies (ALMP) for the unemployed, resulting in variation of usage. This paper presents a novel framework in which this variation is used for the joint assessment of different ways in which ALMP effects can operate. We examine an additional layer of impacts beyond the treatment effects on the treated job seekers called regime effects, which potentially affect all job seekers and which are defined by the extent to which programs are intended to be used in a market. We propose a novel method to jointly estimate regime effects for two types of programs, supportive (carrots) and restrictive (sticks) programs. We apply this to contrast regime and treatment effects on unemployment durations, employment, and post-unemployment earnings using register data that contain PES and case-worker identifiers for about 130,000 job seekers. The results show that “carrots” and “sticks” treatments prolong unemployment, but carrots increase earnings whereas sticks decrease them. We find regime effects of a similar order of magnitude. Higher intended usage of carrots and sticks reduces unemployment durations, but carrots raise earnings whereas sticks decrease them. These average effects could be, however, substantially affected by the cultural background of the job seeker and her past experience with economy and institutions. We are currently exploring the differences in treatment and regime effects of ALMP for different groups of migrants and natives. This is of increasing policy relevance given the current debates on migration and refugee integration. JEL Codes: J65, J68, J64

Empirically, not much is known about the mechanisms how labor market programs like job search assistance and training operate to support finding a job. This paper provides novel evidence to open the blackbox: it causally links the program interventions to the dynamics of search behavior, beliefs and non-cognitive skills. The study is based on a unique combination of a randomized field experiment with detailed register data and a panel of repeated surveys. The tested coaching program, focused on older job seekers, turns out to increase the job finding of participants by 9 percentage points (72% vs. 63% in the control group). The treatment effect is driven by a reduction of reservation wages and an increase in search efficiency. Moreover, I find short-run effects on motivation, self-confidence and beliefs. The job seekers overestimate their chances slightly less with respect to job interviews and salaries. Overall, the focus on realistic expectations and on search strategy appears to be important for program success. The experiment shows that evaluation designs which directly assess behavior can provide a fruitful base for targeted policy design.

Enforcing the compliance with job search obligations is a core task of conditional benefit systems like unemployment insurance (UI) or welfare. For targeted policy design, it is key to understand how the enforcement regime affects job search outcomes. This paper provides first estimates that separately identify the effects of increasing enforcement strictness in UI. As a natural experiment, we exploit a reform which induced a sharp and unanticipated increase in the probability of being sanctioned after the failure to document job search effort. Using a difference-in-differences design, we find that the probability of job finding within six months increases by 6 percentage points in response to the policy change. This effect comes at the cost of lower job stability. As a consequence, early job finders experience losses in total earnings driven by fewer months in employment within the considered post-unemployment period. We use these estimates to quantify the elasticities to changes in enforcement strictness, trading off the short-run gains (job finding) against the mid-run costs (job quality).

Standard empirical policy evaluations usually assum e that the affected individuals are perfectly informed about policy rules (like eligibility condi tions, benefit levels, tax rules etc.) and their implementation. In practice, however, uncertainties about the specifics may be common – due to missing effort by policy makers or individuals to s pread or to collect the relevant information. This study provides quasi-experimental large-scale evide nce on the role of information in shaping the treatment effects of social policy rules. To assess the e impacts we exploit a recent reform in Switzerland on unemployment insurance benefit rules which generated treatment groups who were exposed to different situations of incomplete infor mation. As a reference case -in which individuals are fully informed about the specific rules – we evalua te the effect of a cut of potential benefit duratio n (PBD) from 400 days to 200 days for job seekers bel ow age 25. We compare these reference results with two cases in which job seekers were confronted with exactly the same size of treatment but initia lly were not fully informed about the change. In one ca se they face an update of the expected PBD from 200 to 400, in the other case the opposite. Perfect anticipation would imply that treatment effects in these two cases do not differ from the ones recover ed from the reference case. Preliminary results suggest that they do. The differences are consisten t with patterns of loss aversion or of consumption commitment behavior. JEL codes: J64, J68, H41, D03, D83, D84

Report based on a study conducted for the Swiss State Secretariat for Economic Affairs (SECO), Bonn 2015 (154 pages), overview article published in: Die Volkswirtschaft, 12/2015, 50-53 ( German | French )

Job search requirements constrain the effort choice of unemployment insurance recipients by enforcing a minimum number of monthly applications. This paper is the first to assess how individual search effort, job finding and job stability react to this constraint. Standard job search theory predicts that requirements affect each job seeker relative to her unconstrained effort choice. Therefore, the behavioral treatment intensity of interest is the incremental effort necessary to comply with the requirement. Using novel Swiss register data, we measure this intensity as the difference between the individual requirement threshold and the search effort provided just before requirement imposition.Our econometric approach exploits that – conditional on a broad set of choice fixed effects – the match between the job seeker's unconstrained effort choice and the caseworker's requirement setting behavior is arbitrary. Therefore, it provides exogenous variation in the treatment assignment. We find that binding search requirements that exceed the job seeker's unconstrained effort choice, increase job finding in a substantial way. These effects are highly heterogeneous with respect to the job seeker's characteristics. They come at the cost of increased non-compliance and sanction imposition rates. Moreover, binding requirements have striking negative effects on job stability. Finally, we find that non-binding requirements can also affect search outcomes. This suggests that requirements can operate as signals, thereby generating behavioral effects that are not predicted by standard job search theory.

This reference paper describes the sampling and contents of the IZA Evaluation Dataset Survey and outlines its vast potential for research in labor economics.The data have been part of a unique IZA project to connect administrative data from the German Federal Employment Agency with innovative survey data to study the out-mobility of individuals to work.This study makes the survey available to the research community as a Scientific Use File by explaining the development, structure, and access to the data.Furthermore, it also summarizes previous findings with the survey data.

Forschungsbericht zu einem Projekt im Auftrag der Bertelsmann Stiftung, Bonn 2015 (86 Seiten)

Report based on a study conducted for the Swiss State Secretariat for Economic Affairs (SECO), Bonn 2015 (154 pages), overview article published in: Die Volkswirtschaft, 12/2015, 50-53 ( German | French )

A legal minimum wage of 8.50 € per hour will be introduced in Germany as of January 1, 2015. This paper summarizes and evaluates national and international research findings about minimum wages. Using the IZA micro-simulation model, it also simulates employment and distributional effects as well as fiscal effects of the reform and compares them with other studies. Whereas employment losses cannot be excluded and poverty reductions seem not to be likely, the evidence is not strong enough to make clear-cut predictions for Germany. Therefore, the study argues for a systematic and independent scientific evaluation of the newly introduced legal minimum wage in Germany. This could provide policymakers and voters with solid empirical evidence, and offer them a fair chance to suggest modifications through the electoral process. Zusammenfassung Der gesetzliche Mindestlohn in Höhe von 8,50 Euro je Stunde wird zum 1. Januar 2015 in Deutschland eingeführt. Dieser Beitrag fasst die vorliegenden nationalen und internationalen Erfahrungen mit Mindestlöhnen zusammen. Dabei werden die Beschäftigungs- und Verteilungswirkungen sowie die fiskalischen Effekte mit Hilfe des IZA-Mikrosimulationsmodells abgeschätzt und mit Ergebnissen aus aktuellen Studien verglichen. Es zeigt sich, dass die Ergebnisse aus der Analyse von Branchenmindestlöhnen und aus Mikrosimulationen trotz aufgezeigter Problempotenziale keine abschließende Beurteilung erlauben. Deshalb plädieren die Autoren für eine systematische und unabhängige wissenschaftliche Begleitforschung und Evaluation des gesetzlichen Mindestlohns. Dies lässt Politik und Wählern eine faire Option für eine Kurskorrektur. JEL Classification: J31, J38

Report based on a study conducted for the Swiss State Secretariat for Economic Affairs (SECO), Bonn 2014 (97 pages)