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Using private job agencies: Optimal screening or cream skimming?

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  • Kübler, Dorothea

Abstract

In a model with private information of the worker about her ability and unobservable effort choice, the role of public and private employment services is analyzed. The coexistence of an inefficient employment exchange and an efficient private agency may lead to optimal screening with first best contracts. This is due to the assumption that good types of workers lose more human capital than bad types in periods of unemployment or mismatch. A bad type of worker earns an information rent if the employment exchange is inefficient and the employer chooses not to use the private agency.

Suggested Citation

  • Kübler, Dorothea, 1997. "Using private job agencies: Optimal screening or cream skimming?," SFB 373 Discussion Papers 1997,53, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    • Handle: RePEc:zbw:sfb373:199753
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    References listed on IDEAS

    as
    1. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-833, December.
    2. Kubler, Dorothea, 1997. "Auctioning off labor contracts: Legal restrictions reconsidered," International Review of Law and Economics, Elsevier, vol. 17(1), pages 63-74, March.
    3. Chan, Yuk-Shee, 1983. "On the Positive Role of Financial Intermediation in Allocation of Venture Capital in a Market with Imperfect Information," Journal of Finance, American Finance Association, vol. 38(5), pages 1543-1568, December.
    4. Howitt, Peter & McAfee, R Preston, 1987. "Costly Search and Recruiting," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 89-107, February.
    5. Zweifel, Peter & Zaborowski, Christoph, 1996. "Employment Service: Public or Private?," Public Choice, Springer, vol. 89(1-2), pages 131-162, October.
    6. 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, December.
    7. Yavas, Abdullah, 1992. "Marketmakers versus matchmakers," Journal of Financial Intermediation, Elsevier, vol. 2(1), pages 33-58, March.
    8. repec:bla:econom:v:56:y:1989:i:223:p:395-400 is not listed on IDEAS
    9. Walwei, Ulrich, 1993. "Zum Regulierungsbedarf bei Zulassung privater Arbeitsvermittlung," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 26(3), pages 285-293.
    10. Gary Biglaiser, 1993. "Middlemen as Experts," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 212-223, Summer.
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    More about this item

    Keywords

    principal agent; screening contracts; employment services;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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