The Dilemma of Delegating Search: Budgeting in Public Employment Services
Martin Altemeyer-Bartscher and
Thomas Kuhn ()
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Thomas Kuhn: Chemnitz University of Technology
No 5170, IZA Discussion Papers from Institute of Labor Economics (IZA)
The poor performance often attributed to many public employment services may be explained in part by a delegation problem between the central office and local job centers. In markets characterized by frictions, job centers function as match-makers, linking job seekers with relevant vacancies. Because their search intensity in contacting employers and collecting data is not verifiable by the central authority, a typical moral hazard problem can arise. To overcome the delegation problem and provide high-powered incentives for high levels of search effort on the part of job centers, we propose output-related schemes that assign greater staff capacity to agencies achieving high strike rates.
Keywords: matching unemployment; public employment service; delegation problem; moral hazard; search theory (search for similar items in EconPapers)
JEL-codes: D82 J64 (search for similar items in EconPapers)
Pages: 24 pages
New Economics Papers: this item is included in nep-cta, nep-lab and nep-ltv
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