Labor Market Policy Evaluation with Ace

Abstract

I develop an agent-based computational economics (ACE) model with which I evaluate the aggregate impact of labor market policies. The findings are that government-financed training measures increase the outflow rate from unemployment to employment. Although the overall effect is positive this effect is achieved by reducing the outflow rate for those who do not receive subsidies. Furthermore, the outflow rate would have been downward-biased had one supposed a matching function that is exogenous to policies.

Keywords: Labor market policy evaluation, agent-based computational model, endogenous matching function, job displacement

JEL Classification: C63, J61, J68