TY  - JOUR
AU  - Lee,Woong
TI  - Private Deception and the Rise of Public Employment Offices in the United States, 1890 - 1930
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13695
PY  - 2007
Y2  - December 2007
UR  - http://www.nber.org/papers/w13695
L1  - http://www.nber.org/papers/w13695.pdf
N1  - Author contact info:
Woong Lee
Woong Lee
Department of Economics
University of California, Irvine
E-Mail: woongl@uci.edu
M3  - presented at "Labor Market Intermediation Conf.", May 17-18, 2007
AB  - At the turn of the 20th century, state and local governments in the United States began to establish public employment offices. These non-profit governmental organizations match job seekers and businesses, one of their main objectives being to protect job seekers from fraudulent activities by private employment agencies. In this paper, I propose a theory that describes the malpractices of private employment agencies as a situation of asymmetric information between job seekers and the private employment agencies, which could cause adverse selection in the labor exchange market. The establishment of public employment offices can be viewed as a policy device to eliminate low-quality private employment agencies committing malpractices. I show that public employment offices helped lower the degree of asymmetric information. The majority of job seekers who used public employment offices were unskilled workers, immigrants, or migrants, who were vulnerable to exploitation by private employment agencies. I also find that the role of public employment offices was especially important for interstate migrants who were most lacking in information and networks in their new environment.
ER  -