Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment

Luc Behaghel, Bruno Crépon and Marc Gurgand

No 6518, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Contracting out public services to private firms has ambiguous effects when quality is imperfectly observable. Using a randomized experiment over a national sample in France, we compare the efficiency of the public employment service (PES) vs. private providers in delivering very similar job-search intensive counseling. The impact of each program is assessed with respect to the standard, low intensity track offered by the PES to the unemployed. We find that job-search assistance increases exit rates to employment by 15 to 35%. But the impact of the public program is about twice as large as compared to the private program, at least during the 6 first months after random assignment. We argue that the observed contract structure with the private providers has not overcome the underlying agency problem. We find no evidence of cream- skimming: rather, it seems that profit maximizing private providers have found it optimal to enroll as many job-seekers as they could, but to make minimum effort on the placement of some of them.

Keywords: private provision of public services; unemployment; job-search assistance; labor market intermediaries (search for similar items in EconPapers)
JEL-codes: H44 J64 J68 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2012-04
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (59)

Published - published in: American Economic Journal: Applied Economics, 2014, 6 (4), 142-174

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Related works:
Journal Article: Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment (2014)
Working Paper: Private and public provision of counseling to job seekers: evidence from a large controlled experiment (2014)
Working Paper: Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment (2014)
Working Paper: Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment (2014)
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