Does Job-Search Assistance Affect Search Effort and Outcomes ? A Microeconometric Analysis of Public Versus Private Search Methods

In this paper, we examine the disincentive effects of the public employment serviceon the search effort of unemployed workers and on their exit rate from unemployment.For that purpose, we specify a structural search model with fixed and variablecosts of search in which unemployed workers select their optimal search intensitygiven the exogenous arrival rate of job offers coming from the public employmentagency. Because the theoretical effect of an increase in this exogenous job offer arrivalrate on the structural exit rate from unemployment is ambiguous, we estimatethis model using individual unemployment duration data. Our results show that theexit rate from unemployment increases with the arrival rate of job contacts obtainedby the public employment service, especially for low-educated and low-skilled workers.They also show that the search effort is more costly for low-educated womenand low-skilled adult unemployed workers. This last result suggests that a publicemployment agency that matches searchers and employers is beneficial, in the sensethat it saves searchers in terms of search costs they would otherwise bear.