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Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment

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Author Info

  • Behaghel, Luc

    ()
    (Paris School of Economics)

  • Crépon, Bruno

    ()
    (CREST)

  • Gurgand, Marc

    ()
    (Paris School of Economics)

Abstract

Contracting out public services to private firms has ambiguous effects when quality is imperfectly observable. Using a randomized experiment over a national sample in France, we compare the efficiency of the public employment service (PES) vs. private providers in delivering very similar job-search intensive counseling. The impact of each program is assessed with respect to the standard, low intensity track offered by the PES to the unemployed. We find that job-search assistance increases exit rates to employment by 15 to 35%. But the impact of the public program is about twice as large as compared to the private program, at least during the 6 first months after random assignment. We argue that the observed contract structure with the private providers has not overcome the underlying agency problem. We find no evidence of cream-skimming: rather, it seems that profit maximizing private providers have found it optimal to enroll as many job-seekers as they could, but to make minimum effort on the placement of some of them.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6518.

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Length: 61 pages
Date of creation: Apr 2012
Date of revision:
Publication status: forthcoming in: American Economic Journal: Applied Economics, 2014
Handle: RePEc:iza:izadps:dp6518

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Keywords: labor market intermediaries; job-search assistance; unemployment; private provision of public services;

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References

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  1. David Card & Jochen Kluve & Andrea Weber, 2009. "Active Labor Market Policy Evaluations – A Meta-analysis," Ruhr Economic Papers 0086, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Koning, Pierre & Heinrich, Carolyn J., 2010. "Cream-Skimming, Parking and Other Intended and Unintended Effects of Performance-Based Contracting in Social Welfare Services," IZA Discussion Papers 4801, Institute for the Study of Labor (IZA).
  3. Ashenfelter, Orley & Ashmore, David & Deschenes, Olivier, 2005. "Do unemployment insurance recipients actively seek work? Evidence from randomized trials in four U.S. States," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 53-75.
  4. Blundell, Richard William & Costa Dias, Monica & Meghir, Costas & Van Reenen, John, 2003. "Evaluating the Employment Impact of a Mandatory Job Search Programme," CEPR Discussion Papers 3786, C.E.P.R. Discussion Papers.
  5. James Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," NBER Working Papers 9002, National Bureau of Economic Research, Inc.
  6. Jens Lundsgaard, 2002. "Competition and Efficiency in Publicly Funded Services," OECD Economics Department Working Papers 331, OECD Publishing.
  7. Bennmarker, Helge & Grönqvist, Erik & Öckert, Björn, 2009. "Effects of outsourcing employment services: evidence from a randomized experiment," Working Paper Series 2009:23, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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Citations

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Cited by:
  1. Bruno Crépon & Esther Duflo & Marc Gurgand & Roland Rathelot & Philippe Zamora, 2012. "Do Labor Market Policies Have Displacement Effects? Evidence from a Clustered Randomized Experiment," NBER Working Papers 18597, National Bureau of Economic Research, Inc.
  2. Laun, Lisa & Thoursie, Peter Skogman, 2014. "Does privatisation of vocational rehabilitation improve labour market opportunities? Evidence from a field experiment in Sweden," Journal of Health Economics, Elsevier, vol. 34(C), pages 59-72.
  3. Balazs Egert, 2013. "The Efficiency and Equity of the Tax and Transfer System in France," William Davidson Institute Working Papers Series wp1047, William Davidson Institute at the University of Michigan.
  4. Luc Behaghel & Bruno Crépon & Marc Gurgand, 2013. "Robustness of the encouragement design in a two-treatment randomized control trial," PSE Working Papers halshs-00834169, HAL.
  5. Bernhard Boockmann & Claudia M. Buch & Monika Schnitzer, 2014. "Evidenzbasierte Wirtschaftspolitik in Deutschland: Defizite und Potentiale," IAW Discussion Papers 103, Institut für Angewandte Wirtschaftsforschung (IAW).
  6. Arni, Patrick, 2012. "Kausale Evaluation von Pilotprojekten: Die Nutzung von Randomisierung in der Praxis," IZA Standpunkte 52, Institute for the Study of Labor (IZA).
  7. Olivier Bouba-Olga & Emilie Bourdu, 2012. "Evaluer la gouvernance des politiques locales d'emploi," Working Papers hal-00721677, HAL.
  8. repec:hal:wpaper:halshs-00834169 is not listed on IDEAS
  9. Krug, Gerhard & Stephan, Gesine, 2013. "Is the Contracting-Out of Intensive Placement Services More Effective than Provision by the PES? Evidence from a Randomized Field Experiment," IZA Discussion Papers 7403, Institute for the Study of Labor (IZA).
  10. Borghans, Lex & Golsteyn, Bart H.H. & Stenberg, Anders, 2013. "Does Expert Advice Improve Educational Choice?," IZA Discussion Papers 7649, Institute for the Study of Labor (IZA).
  11. Pierre Koning & Arthur van de Meerendonk, 2013. "The Impact of Scoring Weights on Price and Quality Outcomes: An Application to the Procurement of Welfare-to-Work Contracts," Tinbergen Institute Discussion Papers 13-066/V, Tinbergen Institute.

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