Job search assistance and displacement effects: Evidence from a randomized experiment∗

Three types of early interventions for unemployed Swedish job seekers are studied using a large-scale randomized social experiment. The two-level design with randomization over both local public employment offices and over job seekers enables us to estimate both treatment and displacement effects. Our main findings are that intensified meetings with caseworkers reduce unemployment rates for the participants, but almost all of the effects are due to displacement effects on the non-participants. Analysis of the mechanisms behind the observed effects shows that the positive effect of the intensified meetings are due to an increased number of job vacancy proposals and referrals from caseworkers to the treated unemployed workers. We also show that the observed displacement effects are due to displacement of jobs and not due to displacement of resources. Heterogenous effects reveal that weaker job seekers benefit more from the intensified meetings. The comparison of the three types of meetings shows that individual meetings with caseworkers and distance meetings using IT or telephone have favorable employment effects, but we find no effects of group meetings.