Do labour market policies have displacement effects? Evidence from a clustered randomized experiment

Esther Duflo, co-founder and co-director of the Abdul Latif Jameel Poverty Action Lab (J-PAL) and 2019 Nobel laureate in economics, Bruno Crépon, scientific director of J-PAL MENA and co-chair of labour markets of J-PAL, and additional researchers co-authored a report on the results of a clustered randomised experiment examining labour market dynamics in France. The study evaluates the direct and indirect effects of job placement assistance amongst young, educated job seekers.

The experiment randomly assigned treatment proportion across 235 labour markets (e.g., cities) and eligible job seekers within the markets were randomly assigned to the treatment. Over the course of the eight-month study, evidence suggests that participating unemployed youth in the treatment group were significantly more likely to be stably employed than the control group. However, the gains for the treatment group appear to be partially at the expense of those who did not partake in the job assistance programme. This phenomenon was especially apparent in weak labour markets. The study suggests that the programme has little net benefits.