Job Placement Via Private vs. Public Employment Agencies: Investigating Selection Effects and Job Match Quality in Germany

SSRN Electronic Journal

Abstract

Employment agencies aim to match individuals to appropriate jobs. There are public and private employment agencies, which co-exist in many countries. Selection effects may be relevant in the sense that private agencies potentially engage in 'cream-skimming' by prioritizing highly qualified workers. The resulting job match quality is also important from an individual, a firm, and a society perspective. We examine the selection into job placement via private and public employment agencies as well as the resulting job match qualities, taking a job-market reform in Germany into account: the introduction of placement vouchers for private job placements. Using representative German panel data, we find that cream-skimming is significantly less pronounced under the voucher policy, as private agencies shift the focus toward unemployed individuals with a voucher. In addition, we find evidence based on propensity score matching estimations that private agencies tend to create better matches than their public counterparts.

Authors 3

1. Adam Ayaita corresponding Aachen

   RWTH Aachen University

   Affiliation as printed

   RWTH Aachen University, Templergraben 55, 52056 Aachen, 52056, Germany

2. Christian Grund Aachen

   RWTH Aachen University · IZA - Institute of Labor Economics

   Affiliation as printed

   IZA Institute of Labor Economics, P.O. Box 7240, Bonn, D-53072, Germany

   RWTH Aachen University - School of Economics and Business Administration, Aachen, Germany

3. Lisa Pütz Aachen

   RWTH Aachen University

   Affiliation as printed

   RWTH Aachen University, Templergraben 55, 52056 Aachen, 52056, Germany