Do Lower Caseloads Improve the Performance of Public Employment Services? New Evidence from German Employment Offices

The caseworker-to-clients ratio is an important, but understudied, policy parameter that affects both the quality and cost of public employment services that help job seekers find employment. We exploit a large-scale pilot by Germany's employment agency that hired 490 additional caseworkers in 14 of its 779 offices. We find that lowering caseloads caused a decrease in the rate and duration of local unemployment as well as a higher re-employment rate. Disentangling the mechanisms that contributed to this improvement, we find that offices with lowered caseloads increased monitoring and imposed more sanctions but also intensified search efforts and registered additional vacancies.