The Efficiency of Public Employment Services: A Nonparametric Matching Function Analysis for Switzerland

Abstract

This study develops a methodology for assessing the efficiency of job placement services based on the matching function. Unlike most previous estimates of the matching function, based on aggregate time-series regressions and parametric functional forms, this study employs micro cross-sectional data and uses nonparametric frontier estimation techniques (DEA). The methodology is applied to 126 regional placement offices operating in Switzerland in the period 1997–98. In contrast to time-series regressions, our results point to sizable increasing returns-to-scale. Our findings also suggest that counseling is more effective than other active labor market measures or disciplining actions in increasing matching efficiency.