Carrots without sticks: The impacts of job search assistance in a regime with minimal monitoring and sanctions

This paper uses a high quality longitudinal dataset to assess the impact of an active labour market intervention consisting of referral for interview plus Job Search Assistance (JSA) with the public employment service in Ireland during a period when both job search monitoring and sanctions were virtually non-existent. The results indicate that, relative to a control group with no intervention, unemployed individuals that were exposed to the interview letter and participated in JSA were 16 per cent less likely to have exited to employment prior to 12 months. The negative effects of the intervention approximately doubled when those that received a referral letter but did not attend a JSA interview were removed from the data. The results held when tested against the underlying assumptions of the model, and the influences of both sample selection and unobserved heterogeneity bias. The negative treatment impact is attributed to individuals lowering their job search intensity on learning, through the JSA activation interview, of the lax nature of the activation process. The research, which is unusual in the international literature in allowing the assessment of the impact of job search assistance in the virtual absence of monitoring and sanctions, highlights the need for effective monitoring and sanctions as integral components of labour market activation programmes.