. Moreover, it is shown that the neglect of endogenous but not observable behavior in the empirical literature on labor matching … leads to systematically biased estimates of the matching elasticities, posing a caveat on the results of previous studies … testing for constant returns of the matching function. The theoretical model presented allows to predict the direction of the …

We study active labor market policies (ALMP) in a matching model. ALMPs are modelled as a subsidy to job search …