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Behavior and Effectiveness of Decentralized Employment Offices

Working Papers 332 Ohto Kanninen, Hannu Karhunen, Jeremias Nieminen

We study how decentralization of public employment services afects the labor market outcomes of job seekers and the behavior of employment ofces. We utilize a Finnish temporary reform during which employment services were decentralized for specifc target groups of job seekers in 23 treated municipalities and remained centralized for others. We estimate causal efects of the temporary reform using individual level diference-indiferences in a matched sample. We fnd no evidence of better labor market outcomes and fnd that municipalities are able to shift 14-17 % of their unemployment beneft costs to the central government.