Does privatisation of vocational rehabilitation improve labour market opportunities? Evidence from a field experiment in Sweden

This paper analyses if privatisation of vocational rehabilitation can improve labour market opportunities for individuals on long-term sickness absence. We use a field experiment performed by the Public Employment Service and the Social Insurance Agency in Sweden during 2008-2010, in which over 4000 participants were randomly offered private and public rehabilitation. We find no differences in employment rates following rehabilitation between individuals who received rehabilitation by private and public providers. Also the average cost of rehabilitation was essentially equal for the two types of providers. This suggests that there are no large efficiency gains from privatising vocational rehabilitation.