Public Employment Services under Decentralization: Evidence from a Natural Experiment
CESifo, Munich, 2019
CESifo Working Paper No. 7957
![](https://cesifo.org/DocImg/cesifo1_wp7957.jpg?c=1689237180)
This paper studies whether the decentralization of public employment services (PES) increases job placements among the unemployed. Decentralizing PES has been a widely applied reform used by governments aiming to enhance their efficacy. However, economic theory is ambiguous about its effects, and empirical evidence has been scarce. Using a difference-in-differences design, we exploit unique within-country variation in decentralization provided by the partial devolution of German job centers in 2012. We find that decentralization reduces job placements by approximately 10%. Decentralized providers expand the use of public job creation schemes which diminish job seekers’ reemployment prospects but shift costs to higher levels of government.
Labour Markets