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Is the Contracting-Out of Intensive Placement Services More Effective than Provision by the PES? Evidence from a Randomized Field Experiment

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  • Krug, Gerhard

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Stephan, Gesine

    ()
    (Institute for Employment Research (IAB), Nuremberg)

Abstract

There is a longstanding debate on the advantages of quasi-markets for placement services compared to their public deliverance. During 2009, the German Public Employment Service (PES) implemented a randomized field experiment to investigate if intensive services for hard-to-place unemployed individuals can be provided more effectively by such private providers or by PES in-house teams. Unemployed persons were assigned to intensive services for a period of eight months. This paper presents the first results of this experiment; the observation period covers 18 months after assignment. Initial in-house provision reduces accumulated days in unemployment by one to two months. Approximately two thirds of this effect is attributable to labor market withdrawals. The effect on the share of individuals in a given labor market status (unemployed, employed, and withdrawn) occurs mainly during the program period of eight months and disappears by the end of the observation period. We conclude that in a particular environment, the public provision of placement services can be as least as effective as contracting-out - a simple comparison of effectiveness might, however, be misleading.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7403.

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Length: 36 pages
Date of creation: May 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7403

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Keywords: intensive placement services; contracting-out; randomized field experiment;

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  1. Bernhard, Sarah & Wolff, Joachim, 2008. "Contracting out placement services in Germany : is assignment to private providers effective for needy job-seekers?," IAB Discussion Paper, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 200805, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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  12. Winterhager, Henrik, 2006. "Private Job Placement Services: A Microeconometric Evaluation for Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 06-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  15. Domberger, Simon & Jensen, Paul, 1997. "Contracting Out by the Public Sector: Theory, Evidence, Prospects," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 13(4), pages 67-78, Winter.
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