Mohammad Zariab Hossain: Networks, Norms, and Non-market Subsidy: Three essays on Public Policy

Abstract

Essay I: This paper provides the first causal evidence of peer-driven behavioral spillovers in public employment services (PES). Using rich Swedish administrative data from 2004–2018 and a difference-in-differences design exploiting caseworker moves across local PES offices, I show that caseworker's broader vacancy referral behavior (i.e., vacancy referrals outside a job seeker’s stated preferences) responds strongly to the local practice environment, particularly peer norms. Moving to an office with a 1 pp higher average broader-referral rate increases a caseworker’s own broader-referral propensity by 0.35 pp. I then examine how these practice-environment shocks of the movers (caseworkers) affect their job seekers; and I find that job seekers' re-employment probability (within 180 days) reduces by 1.5 pp when their caseworkers are exposed to 10 pp higher broader referral environment. These findings are consistent with evidence from mandated broader-search policies (Van der Klaauw and Vethaak, 2022) and stand in contrast to settings where broader referrals are given as informational nudge (Belot et al., 2019, 2022). Taken together, the evidence shows that local peer norms are important and have consequences for job seekers’ reemployment prospects.