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Adapting the optimal job search model for active labour market policy

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  • Richard J. Boys
  • Peter J. Dolton
  • Neil R. Walker

Abstract

Summary. The structural theoretical framework for the analysis of duration of unemployment has been the optimal job search model. Recent advances in computational techniques in Bayesian inference now facilitate the analysis of incomplete data sets and the recovery of structural model parameters. The paper uses these methods on a UK data set of the long‐term unemployed to illustrate how the optimal job search model can be adapted to model the effects of an active labour market policy. Without such an adaptation our conclusion is that the simple optimal job search model may not fit empirical unemployment data and could thus lead to a misspecified econometric model and incorrect parameter estimates.

Suggested Citation

  • Richard J. Boys & Peter J. Dolton & Neil R. Walker, 2007. "Adapting the optimal job search model for active labour market policy," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 170(3), pages 759-779, July.
    • Handle: RePEc:bla:jorssa:v:170:y:2007:i:3:p:759-779
    DOI: 10.1111/j.1467-985X.2006.00468.x
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    References listed on IDEAS

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