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Contracting‐Out of Assistance to the Unemployed: Implications of the Australian Experiment

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  • PAUL OSLINGTON

Abstract

The present paper models the behaviour of the unemployed and welfare organisations under contracting. Quality of service is observed by the unemployed, not the government, but quality signals extracted from participation choices allow the socially optimal contract price and program size to be calculated. A political equilibrium program size exists where the median employed voter weighs net taxation cost against the value of assistance should they become unemployed. Programs can be supported even in the absence of risk aversion or altruism. Comparative static responses of program size to various labour market parameters are examined.

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  • Paul Oslington, 2005. "Contracting‐Out of Assistance to the Unemployed: Implications of the Australian Experiment," The Economic Record, The Economic Society of Australia, vol. 81(252), pages 30-37, March.
    • Handle: RePEc:bla:ecorec:v:81:y:2005:i:252:p:30-37
    DOI: 10.1111/j.1475-4932.2005.00214.x
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    References listed on IDEAS

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    Cited by:

    1. Richard B. Freeman, 2006. "Learning from Other Economies: The Unique Institutional and Policy Experiments Down Under," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 195-206, June.
    2. Danula K. Gamage & Pedro S. Martins, 2018. "Evaluating Public-Private Partnerships in Employment Services: The Case of the UK Work Programme," Working Papers 87, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.

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