Do Firms Benefit from Active Labour Market Policies?

42 Pages Posted: 21 Sep 2013

See all articles by Michael Lechner

Michael Lechner

University of St. Gallen - Swiss Institute for Empirical Economic Research

Conny Wunsch

University of Basel; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); University of St. Gallen

Patrycja Scioch

OTTO-Office GmbH & Co KG

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Abstract

This paper investigates the link between variation in the supply of workers who participate in specific types of active labour market policies (ALMPs) and firm performance using a new exceptionally informative German employer-employee data base. For identification we exploit that German local employment agencies (LEAs) have a high degree of autonomy in determining their own mix of ALMPs and that firms' hiring regions overlap only imperfectly with the areas of responsibility of the LEAs. Our results indicate that in general firms do not benefit from ALMPs and in some cases may even be harmed by certain programs, in particular by subsidized employment and longer training programs. These findings complement the negative assessment of the cost-effectiveness of ALMPs from the empirical literature on the effects for participants.

Keywords: subsidized employment programs, training programs, regional variation, program evaluation

JEL Classification: J68

Suggested Citation

Lechner, Michael and Wunsch, Conny and Scioch, Patrycja, Do Firms Benefit from Active Labour Market Policies?. IZA Discussion Paper No. 7614, Available at SSRN: https://ssrn.com/abstract=2329084

Michael Lechner (Contact Author)

University of St. Gallen - Swiss Institute for Empirical Economic Research ( email )

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St. Gallen, 9000
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Conny Wunsch

University of Basel ( email )

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Basel, CH-4003
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IZA Institute of Labor Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Munich, DE-81679
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University of St. Gallen ( email )

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St. Gallen, 9000
Switzerland

Patrycja Scioch

OTTO-Office GmbH & Co KG ( email )

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Hamburg, 22177
Germany

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