Swedish employment offices: A new model for evaluating effectiveness

We measure how well Swedish employment offices perform in delivering the services required of them by the Swedish government. In contrast to earlier studies we use a dynamic efficiency framework, which allows us to better model the intertemporal nature of these services, explicitly allowing for placements of intermediate nature across periods. Rather than using second stage analysis to assess the effects of varying local labor market conditions and differences in client characteristics on performance, we include a measure of the office’s expected work load directly in the model. This measure, derived from duration analysis, is designed to capture the variation across offices in resources needed before an average individual can obtain employment. It is estimated from the characteristics of all unemployed individual and local labor market conditions. The empirical results demonstrate an increase in the office’s expected work loads over time and point to substantial differences in performance across offices. The results also point toward more than optimal placements in intermediate outputs such as non-matching jobs, training, and continued unemployment.