The impact of modeling decisions in statistical profiling

Abstract

Abstract Statistical profiling of job seekers is an attractive option to guide the activities of public employment services. Many hope that algorithms will improve both efficiency and effectiveness of employment services’ activities that are so far often based on human judgment. Against this backdrop, we evaluate regression and machine-learning models for predicting job-seekers’ risk of becoming long-term unemployed using German administrative labor market data. While our models achieve competitive predictive performance, we show that training an accurate prediction model is just one element in a series of design and modeling decisions, each having notable effects that span beyond predictive accuracy. We observe considerable variation in the cases flagged as high risk across models, highlighting the need for systematic evaluation and transparency of the full prediction pipeline if statistical profiling techniques are to be implemented by employment agencies.