This paper demonstrates how economic theory can be combined with state-of-the-art empirics to make quantitative statements about optimal policy. Using a large administrative data set for West Germany as well as nonparametric and semiparametric estimation techniques, I parameterize the model proposed by Pavoni and Violante (2005, 2007) for the optimal choice of different financial and activation measures for unemployed workers. The parameterized model is used to study the role of job search assistance in optimal welfare-to-work programs and assess the optimality of the West German policy in the period 2000 to 2002.

This content is only available as a PDF.
© 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology
2013

Supplementary data

rest_a_00371_esupp- pdf file
You do not currently have access to this content.