COUNSELING AND MONITORING OF UNEMPLOYED WORKERS: THEORY AND EVIDENCE FROM A CONTROLLED SOCIAL EXPERIMENT∗

We investigate the effect of counseling and monitoring on the individual transition rate to employment.We theoretically analyze these policies in a job search model with two search channels and endogenous search effort. In the empirical analysis we use unique administrative and survey data concerning a social experiment with full randomization and compliance.The results do not provide evidence that counseling and monitoring affect the exit rate to work. Monitoring causes a shift from informal to formal job search. We combine our empirical results with the results from our theoretical analysis and the existing empirical literature, to establish a comprehensive analysis of the effectiveness of these policies.