Notes on Behavioral Economics and Labor Market Policy

Sendhil Mullainathan, Harvard University
Linda Babcock, Carnegie Mellon
William Congdon, Brookings Institution
Publication Date:
Jan 2010
Published In:
Project Programs:
Behavioral Economics

In these notes, we briefly review selected topics in labor market policy though the lens of behavioral economics. We identify aspects of existing U.S. policy design that appear at odds with behavioral findings, as well as unrealized policy opportunities those findings suggest. And we make recommendations for either policy reform or further study, according to what the evidence supports. The results of this review are prescriptions for policy design and innovation that reflect a synthesis of traditional and behavioral economic insights. We consider implications of behavioral findings in three areas of labor market policy: unemployment insurance, job search assistance, and job training.


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