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

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  • 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)

Abstract

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.

Suggested Citation

  • Bennmarker, Helge & Grönqvist, Erik & Öckert, Björn, 2012. "Effects of contracting out employment services: Evidence from a randomized experiment," Working Paper Series, Center for Labor Studies 2012:21, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uulswp:2012_021
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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