ABSTRACT: To reduce unemployment targeted hiring subsidies for long-term unemployed and profiling techniques are often recommended. To analyze the effects of these instruments, our model combines two search methods: the public employment service (PES) and random search. Jobseekers choose between an active and a passive search strategy. Labour market policy has two options available. First, only the medium-term and long-term unemployed MLTU) placed by the PES are subsidized. Second, the subsidy is paid for each match with a MLTU. We show that under both regimes equilibrium unemployment is increasing with re-spect to the hiring subsidy. The hiring subsidy raises not only the job destruction rate, but in-creases contrary to the Mortensen-Pissarides model also the duration of unemployment. Like the subsidy, profiling measures, which improve the search effectiveness of the PES, crowd-out the active jobseekers and reduce total employment as well as social welfare.