Channels through which Public Employment Services and Small Business Assistance Programmes Work


  • The author is extremely grateful to Jacob Benus for designing the evaluation and making the data available. She is also grateful to participants of the 3rd Annual IZA Conference on the Evaluation of Labour Market Programmes for helpful comments. She also thanks the extremely valuable suggestions and comments from two anonymous referees and the editor, John Knight. Financial support from the Romanian Ministry of Labour and Social Protection, the National Agency for Employment and Vocational Training, the Spanish ministry of Education and Science (grant SEJ2006-712), the Generalitat de Catalunya (grant SGR2005-712) and Barcelona Economics XREA – Program is also gratefully acknowledged. Slavica Zec has provided excellent research assistance work. Finally, the author is affiliated to IZA in Bonn, FEDEA in Madrid, and MOVE in Barcelona, and greatly appreciates their support.


Empirical evidence has found that public employment services (PES) and small business assistance (SBA) programmes are successful at getting the unemployed back to work. Policywise it is important to know which of these two programmes is more effective, for whom, and when. Using unusually rich survey data and matching methods, this study evaluates the relative effectiveness of PES and SBA for different subgroups in Romania in the late 1990s, where the outcome variables involve earnings, employment and unemployment in 2000–1 and early 2002. It finds that heterogeneity matters and that these programmes need to be tailored to the problem at hand.