EMPLOYMENT-SERVICE - PUBLIC OR PRIVATE

This paper deals with the relative performance of private and public e mployment services. For this purpose, two behavioral models are develo ped which take into account that private and and public employment age nts not only pursue different aims but also face different restriction s, in particular since a public employment agency lacks the right to r eject applicants. While analysis of the necessary optimality condition s yields tentative conclusions about the advantages and disadvantages of both types of employment service, empirically testable hypotheses r esult from the predicted responses to increases in unemployment and in the cost of service, respectively. These predicted behaviors are like ly to be considered unfair by society, causing dissatisfaction with bo th private and public employment agencies.