We examine how the decentralization of public employment services (PES) affects the behavior and service provision of PES offices and the labor market outcomes of job seekers. We utilize a Finnish temporary reform during which PES were decentralized for specific target groups of job seekers in 23 treated municipalities and remained centralized for others. The form of the temporary reform presented the treated municipalities with the possibility of shifting costs to the central government. We estimate the causal effects of the temporary reform using individual-level difference-in-differences in a matched sample. We find no evidence of better labor market outcomes and find evidence consistent with municipalities being able to shift 10% of their unemployment benefit costs to the central government

Kanninen, Ohto; Karhunen, Hannu; Nieminen, Jeremias

We examine how the decentralization of public employment services (PES) affects the behavior and service provision of PES offices and the labor market outcomes of job seekers. We utilize a Finnish temporary reform during which PES were decentralized for specific target groups of job seekers in 23 treated municipalities and remained centralized for others. The form of the temporary reform presented the treated municipalities with the possibility of shifting costs to the central government. We estimate the causal effects of the temporary reform using individual-level difference-in-differences in a matched sample. We find no evidence of better labor market outcomes and find evidence consistent with municipalities being able to shift 10% of their unemployment benefit costs to the central government

Ohto Kanninen, Hannu Karhunen () and Jeremias Nieminen ()
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Hannu Karhunen: Labour Institute for Economic Research LABORE
Jeremias Nieminen: Labour Institute for Economic Research LABORE

No 337, Working Papers from Työn ja talouden tutkimus LABORE, Labour Institute for Economic Research LABORE

Keywords: public employment services; cost-shifting; fiscal federalism; decentralization (search for similar items in EconPapers)
JEL-codes: H11 H75 J48 J64 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2023-04-12
New Economics Papers: this item is included in nep-neu and nep-ure
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