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

61 Pages Posted: 5 May 2012

See all articles by Luc Behaghel

Luc Behaghel

Paris School of Economics; National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Bruno Crepon

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); IZA Institute of Labor Economics

Marc Gurgand

National Center for Scientific Research (CNRS); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

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: unemployment, job-search assistance, labor market intermediaries, private provision of public services

JEL Classification: J64, J68, H44

Suggested Citation

Behaghel, Luc and Crepon, Bruno and Gurgand, Marc, Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment. IZA Discussion Paper No. 6518. Available at SSRN: https://ssrn.com/abstract=2051361

Luc Behaghel (Contact Author)

Paris School of Economics ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Bruno Crepon

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Marc Gurgand

National Center for Scientific Research (CNRS) ( email )

3, rue Michel-Ange
Paris cedex 16, 75794
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

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