The Swedish system is currently undergoing one of the largest labor market reforms in Sweden in the last decades, essentially replacing most of the public provision of employment services with a private provider system. The proposed project focuses on increasing our understanding of the impacts of contracting out public employment services to private providers. In contrast to the scarce evidence in the field, this project goes beyond the question about public or private provision and acknowledges the central role of the exact design of the private provider system. A key design feature not studied before is monitoring of the private providers. The idea is that the government may try to use monitoring to make sure that the private firms provide high-quality services to both advantaged and disadvantaged job seekers. However, monitoring is costly, and it may reduce the rate of innovation.

To study these potential pros and cons with monitoring empirically, we will design, implement, and analyze a novel randomized control trial. The aim is to study the impacts of monitoring on the quality of the services and job finding, and to shed light on important mechanisms such as the impact on innovation and parking. Heterogeneous effects for disadvantaged and more advantaged job seekers are an important part of the project. It should deepen our understanding of private provision of employment services and help to design more efficient systems in Sweden and around the world.