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Are Active Labor Market Policies Directed at Firms Effective? Evidence from a Randomized Evaluation with Local Employment Agencies
Last registered on December 02, 2019

Pre-Trial

Trial Information
General Information
Title
Are Active Labor Market Policies Directed at Firms Effective? Evidence from a Randomized Evaluation with Local Employment Agencies
RCT ID
AEARCTR-0005117
Initial registration date
November 28, 2019
Last updated
December 02, 2019 3:42 PM EST
Location(s)
Region
Primary Investigator
Affiliation
INSEAD
Other Primary Investigator(s)
PI Affiliation
Sciences Po
PI Affiliation
CREST
Additional Trial Information
Status
Completed
Start date
2014-07-01
End date
2016-01-31
Secondary IDs
Abstract
Active labor market policies (ALMPs) have primarily focused on jobseekers through job-search assistance or training programs and numerous studies have shown that these programs can be effective at improving labor market outcomes for participants. Yet their employment effects may be limited in equilibrium because they can induce substantial displacement effects between jobseekers. In this study, we explore the effectiveness and potential limitations of a symmetric intervention that assists firms in their recruitment operations. The motivation for this study comes from the fact that, in the standard equilibrium job search and matching theory that labor economists use, the recruitment, or "vacancy", cost is a key parameter that helps determine both labor demand and the unemployment rate. These models tell us that if these costs fall it will stimulate firm labor demand as the threshold for job creation is lowered. Yet we lack, perhaps surprisingly, direct evidence on the impact of a change in these costs. Hence we evaluate the effect of an innovative active labor market policy (ALMP) implemented by the French Public Employment Service (PES) that targeted the vacancy costs of thousands of small and medium sized firms. Using administrative data, we focus on vacancy creation and hiring in sample firms to measure whether the treatment did or did not stimulate labor demand. We also use this data to explore mechanisms through the types of services implemented to vacancies. Finally we use theory and simulations to discuss the validity of the empirical results in equilibrium and address the question of potential scale-up of this type of firm-based intervention.
External Link(s)
Registration Citation
Citation
algan, yann, bruno crepon and dylan glover. 2019. "Are Active Labor Market Policies Directed at Firms Effective? Evidence from a Randomized Evaluation with Local Employment Agencies." AEA RCT Registry. December 02. https://doi.org/10.1257/rct.5117-1.0.
Experimental Details
Interventions
Intervention(s)
Intervention Start Date
2014-09-15
Intervention End Date
2015-03-31
Primary Outcomes
Primary Outcomes (end points)
The vacancy creation and hires of sample firms.
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Vacancy characteristics, the recruitment services applied to them and the potential matches made to the vacancies by jobseekers, counselors and firms themselves.
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
8,232 establishments (7,438 unique firms) were randomized with probability 0.5 into either treatment or control groups. Treated firms were then prospected by Public Employment Service (PES) counselors and offered a battery of free recruitment services for their current or future recruitment needs. The intensive prospection campaign was carried out from mid-September to end of December 2014. Counselors were then instructed to take no proactive action towards control firms until April 2015 (sanctuary period), after which they were free to contact both control and treatment firms. Using the PES' rich administrative data, we compare vacancy creation with the PES and exhaustive hiring outcomes of sample firms for the 6.5 month sanctuary period and also measure longer-term outcomes using this data up to 31 January 2016. To understand mechanisms, we measure the amount and types of services that were applied to vacancies and the potential matches made to them by jobseekers, counselors and the firms themselves.
Experimental Design Details
Randomization Method
Stratified randomization based on local employment agency, whether the firm recruited in the previous year and its size (in 5 categories). Randomization was done on a computer in the offices of the French Public Employment Service.
Randomization Unit
Firm
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
7,438 firms
Sample size: planned number of observations
7,438 firms
Sample size (or number of clusters) by treatment arms
3,736 control firms, 3,702 treated firms
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers