Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment
Contracting out public services to private firms has ambiguous effects when quality is imperfectly observable. Using a randomized experiment over a national sample in France, we compare the efficiency of the public employment service (PES) vs. private providers in delivering very similar job-search intensive counseling. The impact of each program is assessed with respect to the standard, low intensity track offered by the PES to the unemployed. We find that job-search assistance increases exit rates to employment by 15 to 35%. But the impact of the public program is about twice as large as compared to the private program, at least during the 6 first months after random assignment. We argue that the observed contract structure with the private providers has not overcome the underlying agency problem. We find no evidence of cream- skimming: rather, it seems that profit maximizing private providers have found it optimal to enroll as many job-seekers as they could, but to make minimum effort on the placement of some of them.
|Date of creation:||Apr 2012|
|Publication status:||published in: American Economic Journal: Applied Economics, 2014, 6 (4), 142-174|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
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|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
References listed on IDEAS
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- Pierre Koning & C.J. Heinrich, 2009.
"Cream-skimming, parking and other intended and unintended effects of performance-based contracting in social welfare services,"
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- Heckman, James J. & Heinrich, Carolyn J. & Smith, Jeffrey A., 2002. "The Performance of Performance Standards," IZA Discussion Papers 525, Institute for the Study of Labor (IZA).
- Ashenfelter, Orley & Ashmore, David & Deschenes, Olivier, 2005. "Do unemployment insurance recipients actively seek work? Evidence from randomized trials in four U.S. States," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 53-75.
- Ashenfelter, Orley & Ashmore, David & Deschenes, Olivier, 2000. "Do Unemployment Insurance Recipients Actively Seek Work? Evidence From Randomized Trials in Four U.S. States," IZA Discussion Papers 128, Institute for the Study of Labor (IZA).
- 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.
- Jens Lundsgaard, 2002. "Competition and Efficiency in Publicly Funded Services," OECD Economics Department Working Papers 331, OECD Publishing.
- repec:hrv:faseco:30727607 is not listed on IDEAS Full references (including those not matched with items on IDEAS)
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