Private Contractor Job Placement Counseling
Governments outsource job search assistance to private providers under the theoretical assumption that market discipline and performance-based payments generate lower-cost, higher-quality service delivery. However, outsourcing may fail to deliver efficiency gains if private contractor incentives do not align with public policy objectives.
Picture this
Think of hiring a private driving school that charges high tuition fees and receives cash bonuses whenever a student passes their test. Because the driving school charges high rates and focuses primarily on students who already know how to drive, total expenses skyrocket while overall driving pass rates barely improve compared to the standard public school.
What the evidence says
Assigned personal advisors to maximum 40 clients for weekly meetings over six months, costing between €900 and €3,947 per client depending on placement. Increased job placement probability by 22% within six months (a 4.5 percentage point increase). Increased likelihood of finding a job lasting at least six months by 27% (a 5 percentage point increase). Increased total net expenses per enrolled job seeker by approximately €1,162 without reducing days of unemployment benefits paid.
- Who
- Nearly 44,000 job seekers entering unemployment entitled to at least one year of unemployment benefits across 216 local public employment offices in France [3].
- How
- Randomized evaluation conducted from January to December 2007 tracking administrative and survey data over 12 months across private contracted intensive counseling, public intensive counseling, and standard public comparison tracks [3, 5].
What to do
Conduct rigorous randomized evaluations comparing private contracted services against public provision before expanding outsourcing agreements for social services.
From the source
"Researchers estimate that the private program increased total net expenses per enrolled job seeker by approximately €1,162."
public-or-private-job-counseling-in-france_0.pdf