A General Equilibrium Evaluation of the Employment Service

This paper provides a general equilibrium evaluation of the Employment Service, also known as the Public Labor Exchange (PLX), a national program that facilitates meetings between job seekers and vacancies. The paper departs from the standard partial equilibrium framework of program evaluation by constructing a dynamic general equilibrium matching model with the PLX as a directed search channel and all other search methods as the other channel. In the calibrated model, the general equilibrium impacts of the PLX are different from the standard partial equilibrium ones, mainly because employers post more high-skill vacancies when both search channels operate.