The Dilemma of Delegating Search: Budgeting in Public Employment Service
AbstractThe Recent German research has suggested that extending the number of caseworkers may have a very positive effect on PES performance. The present paper accepts this key insight but argues that there are other factors that may independently drive outcomes and in particular local agents’ discretion. That is, it focuses on the delegation problem between the central office and the local job center ‘matchmakers.’ Because their (search) effort 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 increased 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 The Rimini Centre for Economic Analysis in its series Professional Reports with number 02_11.
Date of creation: Nov 2011
Date of revision:
matching unemployment; public employment service; active labor market policy; moral hazard; search theory;
Other versions of this item:
- Addison, John T. & Altemeyer-Bartscher, Martin & Kuhn, Thomas, 2010. "The Dilemma of Delegating Search: Budgeting in Public Employment Services," IZA Discussion Papers 5170, Institute for the Study of Labor (IZA).
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - 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-2011-11-28 (All new papers)
- NEP-LAB-2011-11-28 (Labour Economics)
- NEP-LTV-2011-11-28 (Unemployment, Inequality & Poverty)
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