Public Employment Agencies and Unemployment Spells: Reconciling the Experimental and Non-Experimental Evidence

Abstract

Econometric evidence strongly suggests that unemployed job- seekers who use the services of a Public Employment Agency (PEA) have longer unemployment spells than those choosing alternative search methods. Yet, in some well-designed U.S. experiments, increased use of PEA services has been associated with faster transitions into jobs. The author argues that the non-experimental studies may be biased toward finding a positive relationship between unemployment spell duration and PEA use because they ignore the possibility that PEAs are chosen by many job-seekers only after other search methods have been tried unsuccessfully and a period of unemployment has elapsed. An analysis of U.K. microdata with information on the timing of PEA use in 1987-88 supports that hypothesis.

JEL Classification: J64, J68