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Understanding the Role of the Public Employment Agency

Author

Listed:
  • Christian Holzner

    (Ludwig Maximilian University of Munich, Germany)

  • Makoto Watanabe

    (VU University Amsterdam, the Netherlands)

Abstract

Using a unique vacancy dataset, we find that the Public Employment Agency (PEA) distributes workers more evenly across vacancies than the private market. We investigate the implications of having such a market place by using a directed search model, where firms can search via the PEA or the private market. Lower coordination frictions reduce wage competition and enable registered firms to pay lower wages compared to the private market. This advantage has to be traded off against the negative selection of applicants coming through the PEA. We take these theoretical predictions to the data and find strong support for them.

Suggested Citation

  • Christian Holzner & Makoto Watanabe, 2016. "Understanding the Role of the Public Employment Agency," Tinbergen Institute Discussion Papers 16-041/VII, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20160041
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    File URL: http://papers.tinbergen.nl/16041.pdf
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    Cited by:

    1. Gautier, Pieter A. & Hu, Bo & Watanabe, Makoto, 2016. "Marketmaking Middlemen," IZA Discussion Papers 10152, Institute for the Study of Labor (IZA).
    2. Gautier, Pieter A. & Muller, Paul & van der Klaauw, Bas & Rosholm, Michael & Svarer, Michael, 2012. "Estimating Equilibrium Effects of Job Search Assistance," IZA Discussion Papers 6748, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Labor Search; Intermediation; Public Employment Agency;

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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