Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment

This paper reports the results of a large-scaled randomized controlled experiment comparing the public and private provision of counseling to job seekers. The intention-to-treat estimates of both programs are not statistically different, but more workers were enrolled in the private program, implying an effect per beneficiary that is twice as large under the public as under the private program. We find suggestive evidence that the private firms may have insufficiently mastered the counseling technology, and exercised less effort on those who had the best chance to find a job. This highlights the incentive problems in designing contracts for these services.