In the Name of Individualization - An Assessment of the Quasi Market of Employment Services in Sweden

Sammanfattning: This paper analyzes the current quasi market structure of contracted out employment services in Sweden to determine whether it is socioeconomically optimal. Drawing mainly on theories by Rebecca M. Blank (2000) and Andrei Shleifer (1998) on the optimal provision of social services it is found that transforming parts of the employment services in Sweden into a quasi market was appropriate, from a theoretical perspective. However, certain characteristics of the current market setup are flawed making it socioeconomically suboptimal. These flaws mainly concern the information asymmetries inherent in the market being addressed through excessively high quality of contracts, rather than through the inclusion of reputational factors in the market; and the lack of a differentiated compensation model that deter private providers from engaging in parking of hard-to-place jobseekers.