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Production Functions : The Search for Identification

  • Design
  • Economics


Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment ∗ L. Behaghel†, B. Cre´pon‡, and M. Gurgand§ June 21, 2012 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 as- sessed with respect to the standard, low intensity track offered by the public employment agency to the unemployed. We find that job-search assistance increases exit rates to em- ployment 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 first 6 months after random assignment. Combining a simple theoretical model with empirical findings, we argue that the contracts with private providers fail to solve the underlying agency problem. The failure is not due to cream-skimming: rather, it seems that profit maximizing private providers find it optimal to enroll as many job-seekers as they can, but to make minimum effort on the placement of some of them (parking). ∗This paper benefited from comments by Joe Doyle, Sylvie Lambert, Thomas Le Barbanchon, Thomas Piketty, Julie Subervie, Katya Zhuravskaya and seminar participants at IFS, INSEE, Evry University, Tinbergen Institute, Ecole the´matique du CNRS, and Paris School of Economics. We would like to thank ANPE, Une´dic and DARES for their involvement in the experiment from which the data are drawn, and for their financial support to the evaluation. In particular, we thank Franc¸ois Aventur, Ce´line Gratadour, Thomas Le Barbanchon, Be´atrice Se´dillot and Claude Seibel. We are grateful to Julien Guitard who contributed to the design and implementation of the experiment on the research side. We als

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