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Did the Introduction of Private Contractors Improve Turnover to Employment in the Swedish Labor Market?

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  • Krister Sund

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Abstract

In Sweden, the new government that took office in 2006 gave the Public Employment Service instructions to introduce private contractors as a complement to publicly provided services. In this paper I use survival analysis in an intention-to-treat approach to compare time to employment of jobseekers in labor market areas that cooperated with private contractors with jobseekers in labor market areas that did not cooperate with private contractors, all within the program Job and Development Guarantee. I use register data from the Swedish Public Employment Service and exploit within region and period variation in a differences-in-differences approach. I find that the labor market areas that cooperated with private contractors had lower turnover to employment than labor market areas that did not cooperate with private contractors. The observed result could be due to different reasons. However, among other things, the contract agreement with private contractors was not optimally designed with a poor incentives structure. Moreover, the introduction of private contractors increased the administrative burden upon the staff of the Public Employment Service. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Krister Sund, 2015. "Did the Introduction of Private Contractors Improve Turnover to Employment in the Swedish Labor Market?," Journal of Labor Research, Springer, vol. 36(4), pages 389-408, December.
  • Handle: RePEc:spr:jlabre:v:36:y:2015:i:4:p:389-408
    DOI: 10.1007/s12122-015-9211-2
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    References listed on IDEAS

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    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Luc Behaghel & Bruno Cr?pon & Marc Gurgand, 2014. "Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 142-174, October.
    3. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
    4. 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.
    5. Winterhager, Henrik & Heinze, Anja & Spermann, Alexander, 2006. "Deregulating job placement in Europe: A microeconometric evaluation of an innovative voucher scheme in Germany," Labour Economics, Elsevier, vol. 13(4), pages 505-517, August.
    6. Bernhard, Sarah & Wolff, Joachim, 2008. "Contracting out placement services in Germany : is assignment to private providers effective for needy job-seekers?," IAB Discussion Paper 200805, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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    More about this item

    Keywords

    Job placement; Private contractors; Contracting out; J68;

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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