Behavior and Effectiveness of Decentralized Employment Offices

We study how decentralization of public employment services affects the labor market outcomes of job seekers and the behavior of employment offices. We utilize a Finnish temporary reform during which employment services were decentralized for specific target groups of job seekers in 23 treated municipalities and remained centralized for others. We estimate causal effects of the temporary reform using individual level difference-in-differences in a matched sample. We find no evidence of better labor market outcomes and find that municipalities are able to shift 14-17 % of their unemployment benefit costs to the central government