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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.

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

    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Bennmarker, Helge & Grönqvist, Erik & Öckert, Björn, 2013. "Effects of contracting out employment services: Evidence from a randomized experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 68-84.
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    13. Ochel, Wolfgang, 2007. "Contracting out Employment Services Involving Temporary Agency Work in Germany," MPRA Paper 13820, University Library of Munich, Germany.
    14. Winterhager, Henrik, 2006. "Private Job Placement Services: A Microeconometric Evaluation for Germany," ZEW Discussion Papers 06-026, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    Cited by:

    1. Michele Belot & Philipp Kircher & Paul Muller, 2015. "Providing Advice to Job Seekers at Low Cost: An Experimental Study on On-Line Advice," ESE Discussion Papers 262, Edinburgh School of Economics, University of Edinburgh.
    2. Bart Cockx & Stijn Baert, 2015. "Contracting Out Mandatory Counselling and Training for Long-Term Unemployed. Private For-Profit or Non-Profit, or Keep it Public?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2015022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Danula K. Gamage & Pedro S. Martins, 2018. "Evaluating Public-Private Partnerships in Employment Services: The Case of the UK Work Programme," Working Papers 87, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    4. Peters, Jörg & Langbein, Jörg & Roberts, Gareth, 2016. "Policy evaluation, randomized controlled trials, and external validity—A systematic review," Economics Letters, Elsevier, vol. 147(C), pages 51-54.
    5. Lukas Mergele & Michael Weber, 2017. "Public employment services under decentralization: evidence from a natural experiment," Working Papers 2017002, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    6. Gesine Stephan, 2016. "Public or private job placement services—Are private ones more effective?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 285-285, August.
    7. Michael Weber, 2016. "The short-run and long-run effects of decentralizing public employment services," ifo Working Paper Series 209, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. Rehwald, Kai & Rosholm, Michael & Svarer, Michael, 2015. "Are Public or Private Providers of Employment Services More Effective? Evidence from a Randomized Experiment," IZA Discussion Papers 9365, Institute for the Study of Labor (IZA).
    9. Bennmarker, Helge & Grönqvist, Erik & Öckert, Björn, 2013. "Effects of contracting out employment services: Evidence from a randomized experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 68-84.
    10. repec:eee:labeco:v:45:y:2017:i:c:p:169-187 is not listed on IDEAS
    11. Tatiana-Camelia DOGARU, 2014. "Contracting Out The Pensions System In Romania," Management and Marketing Journal, University of Craiova, Faculty of Economics and Business Administration, vol. 0(1), pages 91-102, May.
    12. Sørensen, Kenneth Lykke, 2016. "Heterogeneous impacts on earnings from an early effort in labor market programs," Labour Economics, Elsevier, vol. 41(C), pages 266-279.

    More about this item


    Job placement; Contracting out; Randomized experiment;

    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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