Effects of public employment services on labor transitions: an analysis for the Spanish case

Abstract

Purpose

The purpose of this paper is to evaluate the influence of public employment services (PES) on transitions from unemployment.

Design/methodology/approach

The likelihood of exit from unemployment is explained by a multinomial logit model which takes into account the target state of the transition (unemployment, employment or inactivity). In order to analyze the unobserved heterogeneity, the model has been estimated using a Generalized Linear Latent and Mixed Models.

Findings

The analysis suggests that the contribution of PES to improving labor market outcomes is low in the case of transitions to employment. Nevertheless, PES play an important role in workforce dropout prevention.

Practical implications

The results suggest that redesign and modernization are needed to improve PES performance. More intensive job counselling should be provided so that PES get beyond workforce dropout prevention and start having clear positive effects on placement. Target groups should be defined more clearly so as to ensure sustainable transitions for individuals at risk of exclusion. PES should focus on the most disadvantaged jobseekers and those who need more help to get jobs.

Originality/value

First, the results highlight the role PES play in reducing inactivity rates. Second, this is the first study in Spain that uses Labor Force Survey (LFS) data to evaluate PES in a dynamic framework. The LFS is the only data source which allows us to relate people registered unemployed to people considered unemployed by international standards.

Citation

Suárez, P., Cueto, B. and Mayor, M. (2014), "Effects of public employment services on labor transitions: an analysis for the Spanish case", International Journal of Manpower, Vol. 35 No. 7, pp. 996-1015. https://doi.org/10.1108/IJM-05-2014-0109