Using private job agencies: Optimal screening or cream skimming?

Dorothea Kübler

No 1997,53, SFB 373 Discussion Papers from Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes

Abstract: In a model with private information of the worker about her ability and unobservable effort choice, the role of public and private employment services is analyzed. The coexistence of an inefficient employment exchange and an efficient private agency may lead to optimal screening with first best contracts. This is due to the assumption that good types of workers lose more human capital than bad types in periods of unemployment or mismatch. A bad type of worker earns an information rent if the employment exchange is inefficient and the employer chooses not to use the private agency.

Keywords: principal agent; screening contracts; employment services (search for similar items in EconPapers)
JEL-codes: D82 D83 J41 J64 (search for similar items in EconPapers)
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb373:199753

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