What works for disadvantaged unemployed: Private or public ALMP services? Evidence from (unplanned) RCT in Poland

The aim of this paper is to assess effectiveness of public vs. private active labour market services for disadvantaged unemployed. Literature on efficiency of contracting-out ALMP services by public institutions is not consistent. Formalism and limited scope of possible actions in public institutions stands in the way to activation of the less promising unemployed. In contrary, private, contracted-out companies work as a black-box and are paid success fee. We used (done by accident) Randomised Control Trial evaluation of the contracting-out ALMP services programme in Poland. We used public registers data (Syriusz) from Małopolskie Voivodeship (province) of Poland. We compared labour market success indicators between randomly assigned groups of unemployed in receipt of normal LO services and those who were assigned to contracted private agencies. We found strong positive effect of support provided by contracted private agencies. This effect was found to be strongest among the most dismissed groups of the unemployed, while for more promising ones services are more equally effective. Results provide arguments in the discussion on differentiation of ALMP services in order to gain with greater efficiency.