Active Labor Market Policy for Unemployed Youths

This paper evaluates a large-scale French program (PACEA) providing intensive job-search assistance and placement into training to unemployed youths. Guided by a job-search and matching model, we combine fine-grained administrative data with an instrumental-variables strategy that exploits the quasi-random assignment of youths to caseworkers and their heterogeneous propensity to enroll youths into the program, identifying the causal impact of participation over a four-year horizon. PACEA raises employment probabilities by about 10% after completion. These gains arise exclusively along the extensive margin and are not accompanied by higher wages, contract stability, or occupational upgrading. Analysis of mechanisms points to intensified interactions with caseworkers, more structured job-search trajectories, and short vocational training. Bringing the model to the data, we document negative spillovers on non-participants and highlight the importance of labor demand and program design for achieving higher aggregate employment gains and more favorable benefits-costs ratios.

Hervelin, Jérémy, Pierre Villedieu und Anthony Terriau (2026), Active Labor Market Policy for Unemployed Youths, ZEW Discussion Paper Nr. 26-049, Mannheim.