Counseling the Unemployed in France (OPP/CVE)
Frictional unemployment occurs because both jobs and workers are heterogeneous, and a mismatch can result when characteristics of the employee do not coincide with the job. When a mismatch occurs, both parties may invest in finding a better match. This is beneficial to the economy as it results in a more efficient allocation of resources, but when mismatches are frequent, the economy suffers. Unemployment contributes to national dissatisfaction, particularly when youth unemployment is high. Governments will therefore seek ways to reduce unnecessary frictional unemployment and youth unemployment.
Chronic, long-term unemployment is a considerable problem in France. This has resulted in increasing interest in policies that reduce labor market friction and increase employment. At the time of this study, unemployment was decreasing, but 8.4 percent of the labor force was still unemployed, of whom about 30 percent had been unemployed for at least one year. In line with this theme, the French public employment agency (ANPE) and the French unemployment benefit provider (UNEDIC) have strengthened their provision of counseling and monitoring services to jobseekers most at risk of long-term unemployment.
All jobseekers involved in the experiment initially passed through the main public unemployment agency ANPE and were classified into three different categories:
Eligible Newly Unemployed - people who have just entered unemployment and who are eligible for unemployment benefits;
Stock Unemployed - those who were already unemployed at the beginning of the experiment;
Ineligible Newly Unemployed - people that have just become unemployed, but are not eligible for unemployment benefits.
Two separate programs were designed to support job seekers who have been, or are at risk of long-term unemployment: (1) Cap Vers l'Entreprise (CVE), provided directly by ANPE; (2) Oprateurs Privs de Placement (OPP), supplied by private firms mandated by UNEDIC. Each program offered similar forms of assistance and support which consisted of weekly personal counseling and monitoring by a counselor who worked with a limited number of jobseekers. The counseling lasted for at most six months and aimed to assist jobseekers in finding stable employment. This included an intensive follow-up, with at least a weekly contact (email, phone) and a monthly face-to-face meeting between the job seeker and his personal counselor. Compared to the usual track, where a contact is supposed to take place every month, this is a significant increase in human resources dedicated to follow the job seeker. The support also included continued monitoring of the individuals in their new employment.
The OPP program only accepted ineligible newly unemployed people. These jobseekers were randomly assigned into each of the three groups: CVE, OPP, or the normal ANPE track (control group), which included much less intensive support. Jobseekers from the "stock unemployed" and "ineligible newly unemployed" were not eligible for the OPP program, and so they were randomly assigned to either the CVE program or the normal ANPE track.
Data on employment status was collected for three, six and nine month intervals from administrative records and telephone surveys on a sub sample of jobseekers. In ongoing analysis, researchers are interested in estimating not only the average duration of unemployment, whether the counseling affects long term unemployment levels through a better matching of individuals to jobs.
In areas where both programs existed conjointly, and where researchers are able to accurately compare the effects of OPP and CVE, the public CVE program increased job seekers rate of finding employment by 8.2 percentage points at 3 months, 9.2 points at 6 months and 22.6 percentage points at 9 months. For the private OPP program, researchers did not find any statistically significant effects on the job seekers. Overall, these results suggest the CVE had a large impact: at six months, the assistance and support increased workers chances of finding employment by 20-30 percent. This evidence suggests that job seekers who don't find a job tend to remain longer on unemployment registers when counseled by private companies, with almost none of them being removed from the unemployment registers to out of the labor force.
Researchers also note that the aggregate effects of the CVE program were more moderate on jobseekers from the "stock unemployed" and the "ineligible newly unemployed." For the ineligible candidates, researchers estimate CVE had a positive impact on the return to employment of 4.7 points at 6 months and 6.2 at 9 months. For the "stock," the impacts at 3 and 6 months are 4.1 and 6.1 points respectively, but the impact diminishes drastically at 9 months to only 1.9 points.
Behaghel, Luc, Bruno Crpon, and Marc Gurgand. 2014. "Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment." American Economic Journal: Applied Economics, 6(4): 142-174