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Notes on behavioral economics and labor market policy

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  • Linda Babcock
  • William Congdon
  • Lawrence Katz
  • Sendhil Mullainathan

Abstract

Labor market policies succeed or fail at least in part depending on how well they reflect or account for behavioral responses. Insights from behavioral economics, which allow for realistic deviations from standard economic assumptions about behavior, have consequences for the design and functioning of labor market policies. We review key implications of behavioral economics related to procrastination, difficulties in dealing with complexity, and potentially biased labor market expectations for the design of selected labor market policies including unemployment compensation, employment services and job search assistance, and job training. Copyright Babcock et al.; licensee Springer. 2012

Suggested Citation

  • Linda Babcock & William Congdon & Lawrence Katz & Sendhil Mullainathan, 2012. "Notes on behavioral economics and labor market policy," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-14, December.
    • Handle: RePEc:spr:izalpo:v:1:y:2012:i:1:p:1-14:10.1186/2193-9004-1-2
    DOI: 10.1186/2193-9004-1-2
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    More about this item

    Keywords

    Behavioral economics; Unemployment insurance; Job training; Job search; JEL; D03; D04; J08; J24; J64; J65;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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