Fiscal Return on Active Labor Market Policies
Active Labor Market Policies (ALMPs) are designed to offset upfront administration costs by accelerating exits from unemployment and reducing total government outlays on unemployment benefits. High per-client costs in outsourced welfare programs can undermine net fiscal savings if placement speed gains do not significantly reduce benefit duration.
Picture this
Think of investing in a software tool that costs $50 to speed up an employee's work so well that it saves $60 in payroll costs, compared to paying an outside contractor $300 for the same task without saving any payroll time at all.
What the evidence says
Standard public counseling cost €120 per client. Public intensive counseling cost €657 per client and reduced government net costs slightly per job seeker (statistically non-significant). Private intensive counseling cost between €900 and €3,947 per client and increased total net government expenses by approximately €1,162 per enrollee without reducing overall unemployment benefit days paid.
- Who
- Nearly 44,000 job seekers across 216 public employment offices in four French administrative regions.
- How
- RCT measuring baseline program expenditures against total administrative cost savings and unemployment benefit payout durations over 12 months.
What to do
Require cost-effectiveness calculations for outsourced public programs to factor in net benefit payout savings alongside administrative service fees.
From the source
"Researchers estimate that the private program increased total net expenses per enrolled job seeker by approximately €1,162. The public intensive program reduced net costs to the government per job seeker slightly, but the difference was not statistically significant."
public-or-private-job-counseling-in-france_0.pdf
Tagged
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