The Dilemma of Delegating Search: Budgeting in Public Employment Services
AbstractThe poor performance often attributed to many public employment services may be explained in part by a delegation problem between the central office and local job centers. In markets characterized by frictions, job centers function as match-makers, linking job seekers with relevant vacancies. Because their search intensity in contacting employers and collecting data is not verifiable by the central authority, a typical moral hazard problem can arise. To overcome the delegation problem and provide high-powered incentives for high levels of search effort on the part of job centers, we propose output-related schemes that assign greater staff capacity to agencies achieving high strike rates.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5170.
Length: 24 pages
Date of creation: Sep 2010
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Other versions of this item:
- John T. Addison & Martin Altemeyer‐Bartscher & Thomas Kuhn, 2011. "The Dilemma of Delegating Search: Budgeting in Public Employment Service," Professional Reports 02_11, The Rimini Centre for Economic Analysis.
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-18 (All new papers)
- NEP-CTA-2010-09-18 (Contract Theory & Applications)
- NEP-LAB-2010-09-18 (Labour Economics)
- NEP-LTV-2010-09-18 (Unemployment, Inequality & Poverty)
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