Effectiveness of a job vacancy referral scheme

Joost Bollens,Bart Cockx

doi:10.1186/s40173-017-0094-0

Abstract

ᅟThe public employment service (PES) makes use in many countries of vacancy referrals as to facilitate the matching between unemployed workers and vacancies. Based on a “timing-of-events” approach to control for selective participation, this study evaluates whether this policy instrument enhanced the transition to employment in Flanders (region in northern Belgium). Three referral types are distinguished: (1) referrals actively matched by a caseworker by phone or by e-mail; (2) automatic referrals, in which the match is accomplished by a software without caseworker intervention; and (3) invitations, in which the referral is transmitted to the unemployed in a meeting with a caseworker. All three referral instruments are found to be effective, even many months after the transmission of the referral: the first and third referral types more than triples, respectively, double the transition rate to employment both in short- and long-run, while the automatic referrals enhance this rate by 50% in the first 2 months and double it in the long-run.JEL ClassificationC41, J63, J64, J65, J68

Highlights

The referral of job seekers to vacancies is a policy that is used by many countries, yet little is known about the effectiveness of this approach
As suggested by Heckman e.a. (1997), and Blundell e.a. (2004), the recent labor market history can be a crucial component in an non-experimental evaluation, as it is possibly correlated with non-observed characteristics that are driving the employability of the person
Richardson and Van den Berg (2008) prove non-parametric identification of a model that allows for unobserved heterogeneity in the treatment effect if the last mentioned transition: (i) is proportional in the period of time elapsed since entry into the program (t −tr), and in observed and unobserved characteristics, but (ii) does not depend on unemployment duration (t) nor on the moment since entry

Summary

Introduction

The referral of job seekers to vacancies is a policy that is used by many countries, yet little is known about the effectiveness of this approach. Van den Berg et al (2014) investigate the effects of repeated meetings between the unemployed and their case worker on the transition rate from unemployment to employment in Denmark. Van den Berg et al (2013) analyze the effects of these sanctions and of the vacancy referrals on unemployment duration and job quality Their results suggest that sanctions increase the probability of finding a job, but that the wages of sanctioned individuals are lower in the subsequent jobs. In France the application to job referrals is not mandatory, whereas in Germany this is mandatory and sanctioned Since these operational features can affect the effectiveness of the scheme, it is important to gather more evidence on different schemes, so that the extent to which these features matter, can be studied in a more systematic way

Institutional context

Econometric modelling

The econometric model

Identification of the treatment effect

Results

Conclusion