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Contracting‐Out of Assistance to the Unemployed: Implications of the Australian Experiment

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  • PAUL OSLINGTON

Abstract

The present paper models the behaviour of the unemployed and welfare organisations under contracting. Quality of service is observed by the unemployed, not the government, but quality signals extracted from participation choices allow the socially optimal contract price and program size to be calculated. A political equilibrium program size exists where the median employed voter weighs net taxation cost against the value of assistance should they become unemployed. Programs can be supported even in the absence of risk aversion or altruism. Comparative static responses of program size to various labour market parameters are examined.

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  • Paul Oslington, 2005. "Contracting‐Out of Assistance to the Unemployed: Implications of the Australian Experiment," The Economic Record, The Economic Society of Australia, vol. 81(252), pages 30-37, March.
    • Handle: RePEc:bla:ecorec:v:81:y:2005:i:252:p:30-37
    DOI: 10.1111/j.1475-4932.2005.00214.x
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    1. Blank, Rebecca M, 2000. "When Can Public Policy Makers Rely on Private Markets? The Effective Provision of Social Services," Economic Journal, Royal Economic Society, vol. 110(462), pages 34-49, March.
    2. Assar Lindbeck & Sten Nyberg & Jörgen W. Weibull, 1999. "Social Norms and Economic Incentives in the Welfare State," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 1-35.
    3. Alfred M. DOCKERY & Thorsten STROMBACK, 2001. "Devolving public employment services: Preliminary assessment of the Australian experiment," International Labour Review, International Labour Organization, vol. 140(4), pages 429-451, December.
    4. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1127-1161.
    5. David Grubb, 2003. "Points of Comparison between Australia’s Job Network and the Dutch Market for Reintegration Services," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(2), pages 357-370, June.
    6. Gary Burtless, 2002. "Innovations in Labour Market Policies: The Australian Way Comments on an OECD Report," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(1), pages 97-103, March.
    7. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
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    Cited by:

    1. Richard B. Freeman, 2006. "Learning from Other Economies: The Unique Institutional and Policy Experiments Down Under," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 195-206, June.
    2. 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.

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