Essays on Do Labor Market Policies Have Displacement Effects Research Proposal

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The paper "Do Labor Market Policies Have Displacement Effects" is an exceptional example of a research proposal on human resources. This research proposal paper primarily focuses on investigating whether or not the American labor policies directly or indirectly affect job placement assistance of young and educated job seekers in America. This topic is significant in the study of political economy since it investigates the effects of changing government’ s labor policies on job placement, which helps the government to create laws that particularly focus on creating more employment opportunities for young job seekers both in the public and private sectors (Robinson 17).

This research will employ a two-step design where, in the first step, the proportions of young job seekers to be assigned to treatment (0%, 25%, 50%, 75% or 100%) are randomly collected from each of the 400 labor markets, which includes cities and towns participating in this research. Then the second step involves random assignment of potential job seekers to the treatment following this proportion in each labor market. Apart from the collected data sample, this study will rely on the data obtained from previous researches, Public Use Data Achieves, Boston Census Research Data Center (BRDC), new economic releases, vital statistics, current population survey, and Economic Report of the President.

Previous researches on the same topic indicate that after about eight months, unemployed youths who participated in these researches were more likely to secure potential job opportunities than those who were not (Martin et al. 43). However, this research project feels that these gains are transitory since the past researches’ results appear to have resulted at the expense of potential workers, who did not benefit from these studies, especially in cities and towns (labor markets) were they were competing with other more educated workers (Berry 56).

In other words, these studies seem to have had insignificant net benefits on young job seekers. Labor market policies usually succeed or fail in certain circumstances depending on how well they account or reflect for behavioral responses (Saint-Paul 256). Behavioral economics theories that allow considerable deviation from standard economic supposition about behavior have direct or indirect impacts on the design and functioning of labor market policies (Boone & Van 40).

Previous researches on the same project are commonly based on the comparison between the short-term labor market effects of counselled versus non-counselled young job seekers (Martin et al. 12). This implies that experimental studies are still uncommon, in this area of study, but they strive to establish positive outcomes of counselling (Calmfors et al. 61). However, a strong criticism that this study levels against past researches are that they do not consider potential displacement effects. That is job seekers that benefit from these projects stance a chance of getting an eligible job at the expense of unemployed workers who they are competing with in the same labor market (Koning 36).

However, it is worth noting that this is true, particularly in the short-term run, when job vacancies are few. Therefore, assessing the magnitude of such displacement is vital in understanding the effects of any labor market policy. For instance, a labor policy is biased when it compares treated workers to non-treated workers in a given labor market (Layard et al. 477).

In summary, it is necessary to consider the effects of negative externalities when judging the cost-effectiveness and general welfare effects of any labor policy. This is because learning whether and when these externalities occur help in understanding how the labor market functions.


Berry, R A. Labor Market Policies in Canada and Latin America: Challenges of the New Millenium. Boston [u.a.: Kluwer Acad. Publ, 2001. Print.

Boone J, Van J. C,. "Effective Active Labor Market Policies." CEPR Discussion Paper No. 4707 (2004): 40. Print

Calmfors et al. "Does Active Labour Market Policy Work? Lessons from the Swedish Experiences." CESifo Working Paper Series No. 675; IFAU Working Paper No. 2002:4 (2001): 61. Print

Koning, Jaap . Labour Market Policy and Unemployment: Impact and Process Evaluations in Selected European Countries. Cheltenham [u.a.: Elgar, 2001. Print.

Layard, Peter R. G, Stephen J. Nickell, and Richard Jackman. Unemployment: Macroeconomic Performance and the Labour Market. Oxford [u.a.: Oxford Univ. Press, 2005. Print.

Martin et al. "What Works and for Whom: A Review of OECD Countries Experiences with Active Labour Market Policies." Swedish Economic Policy Review, Vol. 8, No. 2 (2001): 9-56. Print

Robinson P. "Active labour-market policies: a case of evidence-based policy-making?" Oxford Journal (2000): 13-26. Print

Sain-Paul G. "Exploring the Political Economy of Labor Market Institutions." Economic Policy (1996): 256. Print

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