Economics serving society

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

Luc Behaghel, Bruno Crépon and Marc Gurgand

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Enhanced support for job-seekers is one of the most effective measures against long-term unemployment. But it assumes substantial human resources : counsellors doing personalised case-work that includes weekly contact with the job-seeker, each have only 40 to 60 clients, which is three times fewer than in standard case-work. In order to avoid recruiting extra staff, and in the hope that competition will create efficiency gains, the French public service has, since 2006, chosen to out-source some of the development of these programmes to job placement agencies in the private sector.
In this article, Behaghel, Crépon and Gurgand compare the efficiency of support programmes as implemented by ANPE and private operators. This is one of the first examples in France of the use of the controlled experiment method for the assessment of employment policies. Since ANPE and the private agencies introduced their counselling programmes at virtually the same time and using very similar modalities, it is possible to compare their effects in quite transparent fashion. Over twelve months, the authors followed more than 200,000 job seekers who were randomly assigned to one or other of the two programmes. They demonstrate that the private agency’s rate of returning people to work was half that of the public service, and cost around twice as much. The fact that the private operators’ aim is to maximise profit and not to return unemployed people to work is one of the explanations for this differential impact: indeed, a significant proportion of their remuneration is fixed, and not linked to the number of people returned to employment. The private sector’s lack of experience in this field, and the fact that no sanctions are implemented for their research failures, are two other possible explanations.
Original title of the article : “Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment”
Published in : American Economic Journal - Applied Economic, Vol. 6 No. 4, October 2014
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