What Did All the Money Do? On the General Ineffectiveness of Recent West German Labour Market Programmes
University of St. Gallen - Swiss Institute for Empirical Economic Research
VU University Amsterdam ; Tinbergen Institute; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
CEPR Discussion Paper No. DP6306
We provide new evidence on the effectiveness of West German labour market programmes by evaluating training and employment programmes that have been conducted 2000-2002 after the first large reform of German labour market policy in 1998. We employ exceptionally rich administrative data that allow us to use microeconometric matching methods and to estimate interesting effects for different types of programmes and participants at a rather disaggregated level. We find that, on average, all programmes fail to improve their participants' chances of finding regular, unsubsidised employment. Rather, participants accumulate 2-13 more months of unemployment than nonparticipants over the 2.5 years following programme start, which, in addition to direct programme costs, induces net costs in terms of benefit payments and wage subsidies amounting to, on average, 1500-7000 EUR per participant. However, we show that there is some scope for improvements in mean employment rates as well as potential for considerable cost savings by a reallocation of participants and nonparticipants to the different programmes.
Number of Pages in PDF File: 42
Keywords: causal effects, Matching estimation, panel data, programme evaluation
JEL Classification: J68working papers series
Date posted: May 23, 2008
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