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

Adam Ayaita, Christian Grund () and Lisa Pütz ()
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Adam Ayaita: RWTH Aachen University
Christian Grund: RWTH Aachen University
Lisa Pütz: RWTH Aachen University

Schmalenbach Journal of Business Research, 2022, vol. 74, issue 2, 137-162

Abstract: 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 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.

Keywords: Cream-skimming; Employment agencies; Job match quality; Job placement; Job search; Vouchers; J64; L33; M5 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s41471-021-00129-1

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