Wage Subsidies for Needy Job-Seekers and Their Effect on Individual Labour Market Outcomes after the German Reforms

27 Pages Posted: 3 Nov 2008

See all articles by Sarah Bernhard

Sarah Bernhard

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Hermann Gartner

Government of the Federal Republic of Germany - Institute for Employment Research (IAB); Friedrich-Alexander-Universität Erlangen-Nürnberg

Gesine Stephan

Institute for Employment Research (IAB); University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg; IZA Institute of Labor Economics

Abstract

Our paper estimates the average effect of wage subsidies - paid to employers for a limited period of time - on the labour market prospects of needy job-seekers without access to insurance-paid 'unemployment benefit I'. The results show that wage subsidies had large and significant favourable effects: 20 months after taking up a subsidised job, the share of persons in regular employment is nearly 40 percentage points higher across participants. On the whole, groups with particular placement difficulties benefit comparatively more from subsidisation.

Keywords: wage subsidies, unemployment benefits II for needy job-seekers, evaluation of active labour market programmes, propensity score matching

JEL Classification: J68, J64, J65

Suggested Citation

Bernhard, Sarah and Gartner, Hermann and Stephan, Gesine, Wage Subsidies for Needy Job-Seekers and Their Effect on Individual Labour Market Outcomes after the German Reforms. Available at SSRN: https://ssrn.com/abstract=1293544 or http://dx.doi.org/10.2139/ssrn.1293544

Sarah Bernhard (Contact Author)

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Hermann Gartner

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Friedrich-Alexander-Universität Erlangen-Nürnberg ( email )

Lange Gasse 20
Lange Gasse 20,
Nürnberg, 90403
Germany

Gesine Stephan

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Lange Gasse 20
Nuremberg, 90403
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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