October 2008

IZA DP No. 3802: The Impacts of Labor Market Policies on Job Search Behavior and Post-Unemployment Job Quality

revised version published as 'Job search incentives and job match quality' in: Labour Economics, 2012, 19 (3), 438-450

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.