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Effects of contracting out employment services: Evidence from a randomized experiment

  • Bennmarker, Helge

    ()

    (Institute for Evaluation of Labour Market and Education Policy)

  • Grönqvist, Erik

    ()

    (Institute for Evaluation of Labour Market and Education Policy)

  • Öckert, Björn

    ()

    (Uppsala Center for Labor Studies)

In many countries welfare services that traditionally have been provided by the public sector are 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 contracting out employment services to private placement agencies. Our results show that unemployed at private placement agencies have a closer interaction with their case worker than unemployed at the Public Employment Service (PES); e.g., they receive more assistance in improving their job search technology. We do not find any overall difference in the chances of finding employment between private placement agencies and the PES, but this hides important heterogeneities across different types of unemployed. In particular, private providers are better at providing employment services to immigrants, whereas they may be worse for adolescents. Any effects tend to fade away over time.

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File URL: http://www.ucls.nek.uu.se/digitalAssets/141/141200_201221.pdf
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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Labor Studies with number 2012:21.

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Length: 55 pages
Date of creation: 04 Dec 2012
Date of revision:
Handle: RePEc:hhs:uulswp:2012_021
Contact details of provider: Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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  1. Anna Aizer & Janet Currie & Enrico Moretti, 2004. "Competition in Imperfect Markets: Does it Help California's Medicaid Mothers?," NBER Working Papers 10429, National Bureau of Economic Research, Inc.
  2. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
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  4. Duggan, Mark, 2004. "Does contracting out increase the efficiency of government programs? Evidence from Medicaid HMOs," Journal of Public Economics, Elsevier, vol. 88(12), pages 2549-2572, December.
  5. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
  6. Timothy Besley & Maitreesh Ghatak, 2003. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 2202, London School of Economics and Political Science, LSE Library.
  7. Winterhager, Henrik & Heinze, Anja & Spermann, Alexander, 2006. "Deregulating Job Placement in Europe: A Microeconometric Evaluation of an Innovative Voucher Scheme in Germany," ZEW Discussion Papers 06-11, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
  9. Lindqvist, Erik, 2008. "Privatization of Credence Goods: Theory and an Application to Residential Youth Care," Working Paper Series 750, Research Institute of Industrial Economics, revised 23 Sep 2008.
  10. Oliver Hart & Andrei Shleifer & Robert Vishny, 1996. "The Proper Scope of Government: Theory and an Application to Prisons," Harvard Institute of Economic Research Working Papers 1778, Harvard - Institute of Economic Research.
  11. Paul H. Malatesta & Kathryn L. DeWenter, 2001. "State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity," American Economic Review, American Economic Association, vol. 91(1), pages 320-334, March.
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