Public Employment Referral Quality and Systemic Friction
Observational StudyReview
Public employment services in developing economies often face declining usage among job seekers due to systemic difficulties in capturing high-quality job vacancies from private firms, leading to job placements that lower post-unemployment wages.
Picture this
Imagine a free municipal staffing agency that only attracts temporary, low-wage job listings because top employers post on private sites; candidates who get matched through the agency find work quickly, but end up earning less than they did in their previous career positions.
What the evidence says
National usage of SINE among Brazilian job seekers fell from 3.81% in 2012 to 1.81% in 2022. While receiving a job referral through SINE increased overall hiring probability, it resulted in a statistically significant wage reduction compared to workers' previous employment due to the system's inability to capture high-quality private vacancies.
- Who was studied
- Job seekers in Brazil utilizing the National Employment System (SINE) between 2012 and 2022.
- How
- Quasi-experimental evaluation utilizing administrative panel data and propensity score matching comparing job seekers who received SINE interview referrals against non-referred workers.
What to do
Establish data-sharing partnerships with private enterprises and implement administrative tracking indicators across job centers to improve vacancy capture quality and match outcomes.
From the source
"Comparing the groups before and after the referral, the authors found that receiving a referral increased the chances of getting a job. However, they also observed a decrease in the salary of those who received a referral in comparison to their previous job."
ENG_Job-search-assistance.pdf