The efficiency of public employment services: a matching frontiers approach

Purpose – This paper aims to model the efficiency of labour offices belonging to the public employment services (PESs) in Spain using a stochastic matching frontier approach. Design/methodology/approach – With this aim in mind, the authors apply a random parameter model approach to control for observed and unobserved heterogeneity. Findings – Results indicate that when the information criteria of the estimates are analysed, it improves by controlling both, observed and unobserved heterogeneity in the inefficiency term. Also, results suggest that counsellors improve the productivity of labour offices and that the share of unemployed skilled persons, unemployed persons aged 44 or younger, as well as the share of unemployed persons in the construction sector, all affect the technical efficiency of PESs offices. Originality/value – The model extends the previous specifications in the matching literature that capture only observed heterogeneity. Moreover, as far as the authors know, it is the first paper that estimates a matching frontier for the Spanish case. Finally, the database they use is at the office level and includes the work carried out by counsellors, which is a novelty in the analysis of this type of studies at the Spanish level.