Social insurance and protection programs provide people with income to sustain their consumption when they have no income from work. However, such income replacement schemes can discourage job search, and therefore increase unemployment. This is the reason why most unemployment insurance programs and some welfare programs require beneficiaries to search for jobs in order to continue receiving benefits. In some cases, job search requirements are accompanied by job search assistance, which can take many forms. Typically, counselors explain how to search for jobs, help job-seekers to write resumes, and direct them to vacancies for which they are qualified.
While it may seem intuitive that job search monitoring and assistance should increase the rate at which recipients return to work, several adverse effects need to be considered. In particular, pushing workers to find a job quickly can encourage them to take low quality jobs, e.g. jobs with lower pay or lower duration. Furthermore, increased job search by some unemployed persons can increase competition for jobs, thereby decreasing the job finding rate of other unemployed workers. In summary, while job search monitoring and assistance can help reduce unemployment duration, it also has perverse effects that must be taken into account.
While more evidence is needed on the usefulness of job search assistance alone, multiple studies have shown that job search monitoring does increase job finding. Studies are particularly convincing in showing that a complete absence of monitoring decreases job finding: when people’s job search is not monitored at all, they are less likely to find a job. Just having to regularly report being unemployed, without reporting any specific job search efforts, is enough to stimulate job finding.