DP2986 | Counselling and Monitoring of Unemployed Workers: Theory and Evidence from a Controlled Social Experiment

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We investigate the effect of counselling and monitoring on the individual employment transition rate. We theoretically analyse these policies in a job search model with two search channels and endogenous search effort. In the empirical analysis we use unique administrative and survey data concerning a social experiment with full randomization and compliance. The results show that counselling and monitoring do not affect the work exit rate. Monitoring causes a shift from informal to formal job searching. We combine our empirical results with the results from our theoretical analysis and the existing empirical literature to establish a comprehensive analysis of the effectiveness of these policies.