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Incentives and Regional Coordination in Employment Services

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  • Arjen de Vetten
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    Abstract

    Due to yardstick competition, municipalities have financial incentives to reduce unemployment, but are not likely to cooperate with each other to have the scale advantages of a regional labour market. On the other hand, a regional public employment service, like the CWI in the Netherlands, has a higher probability and value of matching, but it lacks the incentives to exert the optimal mediation effort. This paper presents a game theoretical model that addresses the trade off between regional coordination and incentives in the mediation of unemployed in the Netherlands. The model is calibrated with information on vacancies and CWI clients for the Netherlands, in order to get an impression whether it is optimal to have a public employment service in the context of this model. Finally, various institutional settings, like a privatised employment service and a performance contract for the employment office, are considered.

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    Bibliographic Info

    Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Memorandum with number 190.

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    Date of creation: Oct 2007
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    Handle: RePEc:cpb:memodm:190

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    8. van den Berg, Gerard J & van der Klaauw, Bas, 2001. "Counselling and Monitoring of Unemployed Workers: Theory and Evidence from a Controlled Social Experiment," CEPR Discussion Papers 2986, C.E.P.R. Discussion Papers.
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    13. Coles, Melvyn G & Smith, Eric, 1996. "Cross-Section Estimation of the Matching Function: Evidence from England and Wales," Economica, London School of Economics and Political Science, vol. 63(252), pages 589-97, November.
    14. Cees Gorter & Guyonne R. J. Kalb, 1996. "Estimating the Effect of Counseling and Monitoring the Unemployed Using a Job Search Model," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 590-610.
    15. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-33, December.
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    17. Gregg, Paul & Wadsworth, Jonathan, 1996. "How Effective Are State Employment Agencies? Jobcentre Use and Job Matching in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 443-67, August.
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