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Do public or private providers of employment services matter for employment? Evidence from a randomized experiment

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  • Rehwald, Kai
  • Rosholm, Michael
  • Svarer, Michael

Abstract

This paper compares the job finding rates of unemployed exposed to either public or 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 at a higher cost. Second, job finding rates do not differ between unemployed subjected to public or private provision of employment services. All in all, the findings suggest that private providers offer more intense and costly services with no significant influence on subsequent employment rates.

Suggested Citation

  • Rehwald, Kai & Rosholm, Michael & Svarer, Michael, 2017. "Do public or private providers of employment services matter for employment? Evidence from a randomized experiment," Labour Economics, Elsevier, vol. 45(C), pages 169-187.
    • Handle: RePEc:eee:labeco:v:45:y:2017:i:c:p:169-187
    DOI: 10.1016/j.labeco.2016.11.005
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    References listed on IDEAS

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    1. 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.
    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. 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.
    5. 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.
    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. Winterhager, Henrik, 2006. "Private Job Placement Services: A Microeconometric Evaluation for Germany," ZEW Discussion Papers 06-026, ZEW - Leibniz Centre for European Economic Research.
    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].
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    Cited by:

    1. Tomasz Gajderowicz & Maciej Jakubowski, 2019. "What works for disadvantaged unemployed: Private or public ALMP services? Evidence from (unplanned) RCT in Poland," Working Papers 2019-04, Faculty of Economic Sciences, University of Warsaw.
    2. Santos, José Manuel & Ortiz Martínez, Esther & Marín Hernández, Salvador, 2021. "Centros Especiales de Empleo ¿Objetivo mercantil o social? Un análisis a través del estudio de su situación económico-financiera," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 51, pages 83-105.
    3. Fredrik Andersson & Henrik Jordahl & Jens Josephson, 2019. "Outsourcing Public Services: Contractibility, Cost, and Quality," CESifo Economic Studies, CESifo Group, vol. 65(4), pages 349-372.
    4. Junquera, Álvaro F., 2024. "More money, more effect? Employment effects of job search programs in Veneto," SocArXiv rjshu, Center for Open Science.
    5. Tomasz Gajderowicz & Maciej Jakubowski, 2019. "What Works for Disadvantaged Unemployed: Private or Public ALMP Services? Evidence from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 332-346.
    6. Julia Bock-Schappelwein & Andrea Egger-Subotitsch & Michael Flotzinger & Gabriele Schmied, 2021. "Vermittlungsaktivitäten der PES in Zeiten von COVID-19," WIFO Studies, WIFO, number 71447.

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    More about this item

    Keywords

    Active labour market policies; Job-search assistance; Private provision of employment services; Contracting out; 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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