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Evaluating Profiling as a Means of Allocating Government Services

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Abstract

This paper considers the use of statistical profiling to allocate persons to alternative options within government programs, or to participation or non-participation in programs. Profiling has been used in the United States to allocate unemployment insurance (UI) claimants to reemployment services based on the predicted duration of their UI claim. We place profiling in the context of the choice among alternative assignment mechanisms. Different mechanisms have different costs and benefits – any one mechanism, whether profiling or something else, may not be optimal for every program. Within profiling systems, we highlight the need for clarity regarding the objective of the assignment mechanism, e.g. equity or efficiency, and we discuss situations in which equity and efficiency goals may conflict. In relation to UI profiling in the United States, we provide empirical evidence from the state of Kentucky on two important questions. First, we demonstrate that it is possible to effectively predict the duration of UI spells, but that effectively doing so requires using more covariates than many US states presently do. This finding is important because effective prediction of the profiling variable is a necessary but not sufficient condition for the success of a profiling system. Second, we show that the impact of reemployment services does not appear to vary with expected duration of the UI spell, indicating that UI profiling in Kentucky does not advance the goal of efficiency, though it may advance equity goals.

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Bibliographic Info

Paper provided by University of Western Ontario, Department of Economics in its series UWO Department of Economics Working Papers with number 200018.

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Date of creation: 2000
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Handle: RePEc:uwo:uwowop:200018

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Postal: Department of Economics, Reference Centre, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/department_working_papers.html

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  1. Rajeev Dehejia, 1999. "Program Evaluation as a Decision Problem," NBER Working Papers 6954, National Bureau of Economic Research, Inc.
  2. Charles F. Manski, 1999. "Statistical Treatment Rules for Heterogeneous Populations: With Application to Randomized Experiments," NBER Technical Working Papers 0242, National Bureau of Economic Research, Inc.
  3. Manski, Charles F., 2000. "Identification problems and decisions under ambiguity: Empirical analysis of treatment response and normative analysis of treatment choice," Journal of Econometrics, Elsevier, vol. 95(2), pages 415-442, April.
  4. Stephen Machin & Alan Manning, 1998. "The Causes and Consequences of Long-Term Unemployment in Europe," CEP Discussion Papers dp0400, Centre for Economic Performance, LSE.
  5. James J. Heckman & Jeffrey A. Smith & Christopher Taber, 1996. "What Do Bureaucrats Do? The Effects of Performance Standards and Bureaucratic Preferences on Acceptance into the JTPA Program," NBER Working Papers 5535, National Bureau of Economic Research, Inc.
  6. Randall W. Eberts & Christopher J. O'Leary, 1996. "Design of the Worker Profiling and Reemployment Services System and Evaluation in Michigan," Upjohn Working Papers and Journal Articles 96-41, W.E. Upjohn Institute for Employment Research.
  7. Christopher J. O'Leary & Stephen A. Wandner, 2001. "Unemployment Compensation and Older Workers," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research.
  8. Heckman, James J & Heinrich, Carolyn & Smith, Jeffrey, 1997. "Assessing the Performance of Performance Standards in Public Bureaucracies," American Economic Review, American Economic Association, vol. 87(2), pages 389-95, May.
  9. Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 2002. "Is the Threat of Reemployment Services More Effective than the Services Themselves? Experimental Evidence from the UI System," NBER Working Papers 8825, National Bureau of Economic Research, Inc.
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