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Incentives and Regional Coordination in Employment Services

  • Arjen de Vetten
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    Due to yardstick competition, municipalities have financial incentives to reduce unemployment, but are not likely to cooperate with each other to have the scale advantages of a regional labour market. On the other hand, a regional public employment service, like the CWI in the Netherlands, has a higher probability and value of matching, but it lacks the incentives to exert the optimal mediation effort. This paper presents a game theoretical model that addresses the trade off between regional coordination and incentives in the mediation of unemployed in the Netherlands. The model is calibrated with information on vacancies and CWI clients for the Netherlands, in order to get an impression whether it is optimal to have a public employment service in the context of this model. Finally, various institutional settings, like a privatised employment service and a performance contract for the employment office, are considered.

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    Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Memorandum with number 190.

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    Date of creation: Oct 2007
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    Handle: RePEc:cpb:memodm:190
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    1. Coles, Melvyn G & Smith, Eric, 1996. "Cross-Section Estimation of the Matching Function: Evidence from England and Wales," Economica, London School of Economics and Political Science, vol. 63(252), pages 589-97, November.
    2. Peter Dolton & Donal O'Neill, 2002. "The Long-Run Effects of Unemployment Monitoring and Work-Search Programs: Experimental Evidence from the United Kingdom," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 381-403, Part.
    3. Burgess, Simon M. & Profit, Stefan, 1998. "Externalities in the matching of workers and firms in Britain," SFB 373 Discussion Papers 1998,19, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    4. Ashenfelter, Orley & Ashmore, David & Deschenes, Olivier, 2005. "Do unemployment insurance recipients actively seek work? Evidence from randomized trials in four U.S. States," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 53-75.
    5. Dale T. Mortensen & Christopher A. Pissarides, 1999. "Job Reallocation, Employment Fluctuations and Unemployment," CEP Discussion Papers dp0421, Centre for Economic Performance, LSE.
    6. van den Bergh, Gerhard & van deer Klaauw, Bas, 2001. "Counseling and monitoring of unemployed workers: theory and evidence from a controlled social experiment," Working Paper Series 2001:12, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    7. Petrongolo, Barbara & Pissarides, Christopher, 2000. "Looking Into The Black Box: A Survey Of The Matching Function," CEPR Discussion Papers 2409, C.E.P.R. Discussion Papers.
    8. Cees Gorter & Guyonne R. J. Kalb, 1996. "Estimating the Effect of Counseling and Monitoring the Unemployed Using a Job Search Model," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 590-610.
    9. Skedinger, Per & Lundin, Martin, 2000. "Decentralisation of Active Labour Market Policy: The Case of Swedish Local Employment Service Committees," Working Paper Series 537, Research Institute of Industrial Economics.
    10. M. C. Burda & S. Profit, 1996. "Matching Across Space: Evidence on Mobility in the Czech Republik," SFB 373 Discussion Papers 1996,11, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    11. Coles, Melvyn G & Smith, Eric, 1994. "Marketplaces and Matching," CEPR Discussion Papers 1048, C.E.P.R. Discussion Papers.
    12. van Ours, J.C., 1994. "Matching Unemployed and Vacancies at the Public Employment Office," Other publications TiSEM d8261d35-28fe-44bc-9c14-0, Tilburg University, School of Economics and Management.
    13. Pierre Koning, 2006. "Measuring the effectiveness of Public Employment Service (PES) workers; an empirical analysis based on the performance outcomes of regional employment offices," CPB Discussion Paper 73, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-33, December.
    15. repec:cup:cbooks:9780521551847 is not listed on IDEAS
    16. repec:ner:tilbur:urn:nbn:nl:ui:12-142173 is not listed on IDEAS
    17. Martin, John P. & Grubb, David, 2001. "What works and for whom: a review of OECD countries' experiences with active labour market policies," Working Paper Series 2001:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    18. van Ours, Jan C, 1994. "Matching Unemployed and Vacancies at the Public Employment Office," Empirical Economics, Springer, vol. 19(1), pages 37-54.
    19. Gregg, Paul & Wadsworth, Jonathan, 1996. "How Effective Are State Employment Agencies? Jobcentre Use and Job Matching in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 443-67, August.
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