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Private Deception and the Rise of Public Employment Offices in the United States, 1890-1930

In: Studies of Labor Market Intermediation

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  • Woong Lee

Abstract

At the turn of the 20th century, state and local governments in the United States began to establish public employment offices. These non-profit governmental organizations match job seekers and businesses, one of their main objectives being to protect job seekers from fraudulent activities by private employment agencies. In this paper, I propose a theory that describes the malpractices of private employment agencies as a situation of asymmetric information between job seekers and the private employment agencies, which could cause adverse selection in the labor exchange market. The establishment of public employment offices can be viewed as a policy device to eliminate low-quality private employment agencies committing malpractices. I show that public employment offices helped lower the degree of asymmetric information. The majority of job seekers who used public employment offices were unskilled workers, immigrants, or migrants, who were vulnerable to exploitation by private employment agencies. I also find that the role of public employment offices was especially important for interstate migrants who were most lacking in information and networks in their new environment.
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Suggested Citation

  • Woong Lee, 2009. "Private Deception and the Rise of Public Employment Offices in the United States, 1890-1930," NBER Chapters, in: Studies of Labor Market Intermediation, pages 155-181, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:3588
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    References listed on IDEAS

    as
    1. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-833, December.
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    5. William M. Leiserson, 1915. "The Movement for Public Labor Exchanges," Journal of Political Economy, University of Chicago Press, vol. 23(7), pages 707-707.
    6. Price V. Fishback & Shawn Everett Kantor, 2000. "A Prelude to the Welfare State: The Origins of Workers' Compensation," NBER Books, National Bureau of Economic Research, Inc, number fish00-1, July.
    7. Kubler, Dorothea, 1999. "Coexistence of Public and Private Job Agencies: Screening with Heterogeneous Institutions," Public Choice, Springer, vol. 101(1-2), pages 85-107, October.
    8. Yavas, Abdullah, 1994. "Middlemen in Bilateral Search Markets," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 406-429, July.
    9. George B. Baldwin, 1951. "Tulamusa: A Study of the Place of the Public Employment Service," ILR Review, Cornell University, ILR School, vol. 4(4), pages 509-526, July.
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    Cited by:

    1. Bruno Crépon & Gerard J. van den Berg, 2016. "Active Labor Market Policies," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 521-546, October.
    2. Alexander Murray, 2010. "The State of Knowledge on the Role and Impact of Labour Market Information: A Survey of the International Evidence," CSLS Research Reports 2010-05, Centre for the Study of Living Standards.

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    More about this item

    JEL classification:

    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation

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