Working Paper: CEPR ID: DP3825
Authors: Michael Lechner; Jeffrey Smith
Abstract: We investigate the allocation of unemployed individuals to different subprograms within Swiss active labour market policy by the caseworkers at local employment offices in Switzerland in 1998. We are particularly interested in whether the caseworkers allocate the unemployed to services in ways that will maximize the program-induced changes in their employment probabilities. Our econometric analysis uses unusually informative data originating from administrative unemployment and social security records. For the estimation we apply matching estimators adapted to the case of multiple programmes. The number of observations in this database is sufficiently high to allow for this nonparametric analysis to be conducted in narrowly defined subgroups. Our results indicate that Swiss caseworkers do not do a very good job of allocating their unemployed clients to the subprograms so as to maximize their subsequent employment prospects. Our findings suggest one of three possible conclusions. First, case-workers may be trying to solve the problem of allocating the unemployed to maximize their subsequent employment, but may lack the skills or knowledge to do this. Second, caseworkers may have a goal other than efficiency, such as allocating the most expensive services to the least well-off clients, that is not explicit in the law regulating active labour market policies. Third, the distortions of the local decision process could be due to federal authorities imposing strict minimum participation requirements for the various programs at the regional level.
Keywords: Active Labour Market Policy; Caseworkers; Statistical Profiling; Statistical Treatment Rule; Targeting
JEL Codes: H00; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Caseworker allocations (I38) | Employment prospects (J68) |
| Skills or knowledge of caseworkers (I38) | Caseworker allocations (I38) |
| Diverging goals of caseworkers (I39) | Caseworker allocations (I38) |
| Caseworker allocations (I38) | Employment rates (J68) |
| Alternative allocation schemes (D51) | Employment rates (J68) |
| Service assignments agreement (M55) | Post-program employment rates (J68) |