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Are Public or Private Providers of Employment Services More Effective? Evidence from a Randomized Experiment

Author

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  • Rehwald, Kai

    (Aarhus University)

  • Rosholm, Michael

    (Aarhus University)

  • Svarer, Michael

    (Aarhus University)

Abstract

This paper compares the effectiveness of public and private providers of employment services. Reporting from a randomized field experiment conducted in Denmark we assess empirically the case for contracting out employment services for a well-defined group of highly educated job-seekers (unemployed holding a university degree). Our findings suggest, first, that private providers deliver more intense, employment-oriented, and earlier services. Second, public and private provision of employment services are equally effective regarding subsequent labour market outcomes. And third, the two competing service delivery systems appear to be equally costly from a public spending perspective.

Suggested Citation

  • 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 of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9365
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    References listed on IDEAS

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    1. Luc Behaghel & Bruno Cr?pon & Marc Gurgand, 2014. "Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 142-174, October.
    2. Krug, Gerhard & Stephan, Gesine, 2013. "Is the Contracting-Out of Intensive Placement Services More Effective than Provision by the PES? Evidence from a Randomized Field Experiment," IZA Discussion Papers 7403, Institute of Labor Economics (IZA).
    3. 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?," CESifo Working Paper Series 5587, CESifo.
    4. David Card & Jochen Kluve & Andrea Weber, 2010. "Active Labour Market Policy Evaluations: A Meta-Analysis," Economic Journal, Royal Economic Society, vol. 120(548), pages 452-477, November.
    5. Zweifel, Peter & Zaborowski, Christoph, 1996. "Employment Service: Public or Private?," Public Choice, Springer, vol. 89(1-2), pages 131-162, October.
    6. George J. Carcagno & James C. Ohls, 1982. "Using Private Employment Agencies to Place Public Assistance Clients in Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 132-143.
    7. 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.
    8. Bernhard, Sarah & Wolff, Joachim, 2008. "Contracting out placement services in Germany : is assignment to private providers effective for needy job-seekers?," IAB-Discussion Paper 200805, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Laun, Lisa & Thoursie, Peter Skogman, 2014. "Does privatisation of vocational rehabilitation improve labour market opportunities? Evidence from a field experiment in Sweden," Journal of Health Economics, Elsevier, vol. 34(C), pages 59-72.
    10. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097, Elsevier.
    11. Winterhager, Henrik, 2006. "Private Job Placement Services: A Microeconometric Evaluation for Germany," ZEW Discussion Papers 06-026, ZEW - Leibniz Centre for European Economic Research.
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    Citations

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    Cited by:

    1. Briscese, Guglielmo & Leibbrandt, Andreas, 2022. "Designing the market for job vacancies: A trust experiment with employment centers staff," Labour Economics, Elsevier, vol. 78(C).
    2. Ayaita, Adam & Grund, Christian & Pütz, Lisa, 2021. "Job Placement via Private vs. Public Employment Agencies: Investigating Selection Effects and Job Match Quality in Germany," IZA Discussion Papers 14024, Institute of Labor Economics (IZA).
    3. Cockx, Bart & Baert, Stijn, 2015. "Contracting Out Mandatory Counselling and Training for Long-Term Unemployed: Private For-Profit or Non-Profit, or Keep It Public?," IZA Discussion Papers 9459, Institute of Labor Economics (IZA).
    4. 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.
    5. Lalive, Rafael & Cottier, Lionel & Flueckiger, Yves & Kempeneers, Pierre, 2018. "Does Job Search Assistance Really Raise Employment?," CEPR Discussion Papers 13133, C.E.P.R. Discussion Papers.
    6. Gesine Stephan, 2016. "Public or private job placement services—Are private ones more effective?," IZA World of Labor, Institute of Labor Economics (IZA), pages 285-285, August.
    7. Adam Ayaita & Christian Grund & Lisa Pütz, 2022. "Job Placement via Private vs. Public Employment Agencies: Investigating Selection Effects and Job Match Quality in Germany," Schmalenbach Journal of Business Research, Springer, vol. 74(2), pages 137-162, June.

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    More about this item

    Keywords

    active labour market policies; job-search assistance; contracting out; private provision of employment services; treatment effect evaluation; randomized trial; cost-analysis;
    All these keywords.

    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
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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