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Effects of outsourcing employment services: evidence from a randomized experiment

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In many countries welfare services that traditionally have been provided by the public sector are increasingly being contracted out to private providers. But are private contractors better at providing these services? We use a randomized experiment to empirically assess the effectiveness of contacting out employment services to private placement agencies. Our results show that unemployed at private placement agencies have a much closer interaction with their placement worker than unemployed at the Public Employment Service (PES). In particular, unemployed at private agencies receive more assistance in improving their job search technology. We do not find any overall difference in the probability of employment between private placement agencies and the PES), but this hides important heterogeneities across different types of unemployed. We find evidence that private providers are better at providing em¬ployment services to immigrants, and also indications that they may be worse for adolescents. Any effects tend to fade away over time.

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  • 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.
  • Handle: RePEc:hhs:ifauwp:2009_023
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    Cited by:

    1. 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.
    2. Krug, Gerhard & Stephan, Gesine, 2013. "Is the Contracting-Out of Intensive Placement Services More Effective than Provision by the PES? Evidence from a Randomized Field Experiment," IZA Discussion Papers 7403, Institute of Labor Economics (IZA).
    3. Michèle Belot & Philipp Kircher & Paul Muller, 2019. "Providing Advice to Jobseekers at Low Cost: An Experimental Study on Online Advice," Review of Economic Studies, Oxford University Press, vol. 86(4), pages 1411-1447.
    4. Joakim Hveem, 2013. "Are temporary work agencies stepping stones into regular employment?," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-27, December.
    5. Andersson, Fredrik & Jordahl, Henrik, 2011. "Outsourcing Public Services: Ownership, Competition, Quality and Contracting," Working Paper Series 874, Research Institute of Industrial Economics.
    6. 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.
    7. Gerdes, Christer, 2015. "Does Performance Information Affect Job Seekers in Selecting Private Providers in Voucher-Based ALMP Programs?," IZA Discussion Papers 8992, Institute of Labor Economics (IZA).
    8. Hveem, Joakim, 2012. "Are temporary work agencies stepping-stones into regular employment?," SULCIS Working Papers 2012:3, Stockholm University, Linnaeus Center for Integration Studies - SULCIS.
    9. Laun, Lisa & Thoursie, Peter Skogman, 2014. "Does privatisation of vocational rehabilitation improve labour market opportunities? Evidence from a field experiment in Sweden," Journal of Health Economics, Elsevier, vol. 34(C), pages 59-72.
    10. Forslund, Anders, 2009. "Labour supply incentives, income support systems and taxes in Sweden," Working Paper Series 2009:30, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    11. Homrighausen, Pia, 2014. "Differential pricing and private provider performance," IAB Discussion Paper 201425, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    More about this item

    Keywords

    Job placement; Contracting out;

    JEL classification:

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

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