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Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment


  • Behaghel, Luc

    () (Paris School of Economics)

  • Crépon, Bruno

    () (CREST)

  • Gurgand, Marc

    () (Paris School of Economics)


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.

Suggested Citation

  • Behaghel, Luc & Crépon, Bruno & Gurgand, Marc, 2012. "Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment," IZA Discussion Papers 6518, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6518

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    References listed on IDEAS

    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Pierre Koning & C.J. Heinrich, 2009. "Cream-skimming, parking and other intended and unintended effects of performance-based contracting in social welfare services," CPB Discussion Paper 134, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2004. "Evaluating the Employment Impact of a Mandatory Job Search Program," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 569-606, June.
    4. James J. Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 778-811.
    5. 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.
    6. 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.
    7. Jens Lundsgaard, 2002. "Competition and Efficiency in Publicly Funded Services," OECD Economics Department Working Papers 331, OECD Publishing.
    8. repec:hrv:faseco:30727607 is not listed on IDEAS
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    More about this item


    private provision of public services; unemployment; job-search assistance; labor market intermediaries;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets

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