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

Adam Ayaita, Christian Grund and Lisa Pütz

No 1121, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

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; selection; vouchers (search for similar items in EconPapers)
JEL-codes: J64 L33 M5 (search for similar items in EconPapers)
Pages: 27 p.
Date: 2021
New Economics Papers: this item is included in nep-eur and nep-lab
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