Should Local Public Employment Services be Merged with the Local Social Benefit Administrations?

CESifo Working Paper No. 3472

Should Local Public Employment Services be
Merged with the Local Social Benefit
Administrations?

Abstract

The German Federal government has allowed some regions (Approved Local Providers) to be
solely responsible for the care of long-term unemployed. The remaining regions had to form
Joint Local Agencies, where the local social benefit administrations work together with the
local public employment services. We find that despite positive self-selection Approved Local
Providers do not perform better than Joint Local Agencies. Even more interestingly, using a
unique data set on organisational characteristics we are able to show that the organisational
features implemented primarily by Approved Local Providers are positively correlated with
the job finding probability of the long-term unemployed. Thus, regions that self-selected into
Approved Local Providers seem to have implemented a better organisational structure.
However, their relatively poor performance overall compared to Joint Local Agencies
suggests that they underestimated the benefits of having the local public employment service
merged with the local social benefit administration.

JEL-Code: I380, J640, C310.

Keywords: organisation, labour market integration, evaluation.

The authors wish to thank Stefan Bauernschuster, Thiess Büttner, Michael Fertig and Martin
Werding for their useful comments and Rolf Kleimann for invaluable assistance with the data.
The usual disclaimer applies.

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