published in: Labour Economics, 2007, 14 (2), 135-151
We investigate the allocation of unemployed individuals to different subprograms within
Swiss active labour market policy by the caseworkers at local employment offices in
Switzerland in 1998. We are particularly interested in whether the caseworkers allocate the
unemployed to services in ways that will maximize the program-induced changes in their
employment probabilities. Our econometric analysis uses unusually informative data
originating from administrative unemployment and social security records. For the estimation
we apply matching estimators adapted to the case of multiple programmes. The number of
observations in this database is sufficiently high to allow for this nonparametric analysis to be
conducted in narrowly defined subgroups. Our results indicate that Swiss caseworkers do not
do a very good job of allocating their unemployed clients to the subprograms so as to
maximize their subsequent employment prospects. Our findings suggest one of three
possible conclusions. First, caseworkers may be trying to solve the problem of allocating the
unemployed to maximize their subsequent employment, but may lack the skills or knowledge
to do this. Second, caseworkers may have a goal other than efficiency, such as allocating
the most expensive services to the least well-off clients, that is not explicit in the law
regulating active labour market policies. Third, the distortions of the local decision process
could be due to federal authorities imposing strict minimum participation requirements for the
various programs at the regional level.
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