The Value of a Vacancy: Evidence from a Randomized Evaluation with Local Employment Agencies in France

This paper analyzes the impact of a large scale randomized experiment that targets firm labor demand by supporting its recruitment practices. We evaluate the effect of a Public Employment Service’s (PES) intensive firm prospection campaign in which free recruitment services were proposed to a large number of small and medium sized firms. We find large impacts of this new active labor market policy: a 30% increase in vacancy postings with the PES and a 9% increase in permanent contract hires, translating into 48 more workdays created by treated firms on average over a six-month period. We highlight that the intervention does not suffer from the same displacement effects as traditional job-placement interventions which are especially high when labor demand is low. Additionally, job creation impacts are centered in slack labor markets, suggesting that firm-level displacement effects are likely minimal. We confront a simple model of firm search for candidates against data on vacancy characteristics and services deliv- ered to these vacancies by the PES. We find non-experimental evidence that candidate prescreening may be a key component of the intervention because it reduces matching frictions associated with slack labor markets. Finally, the intervention might be signifi- cantly more cost-effective in low-demand labor markets than traditional job-placement policies that focus on jobseekers. These results suggest that active labor market policies that focus on firm labor demand may be a valuable addition to the labor policy toolkit.