Job Creation Schemes in Turbulent Times

38 Pages Posted: 21 Nov 2016

See all articles by Annette Bergemann

Annette Bergemann

University of Bristol - Department of Economics; IZA Institute of Labor Economics; IFAU - Institute for Labour Market Policy Evaluation

Laura Pohlan

ZEW – Leibniz Centre for European Economic Research; University of Mannheim

Arne Uhlendorff

IZA Institute of Labor Economics

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Abstract

This paper analyzes the impact of job creation schemes (JCS) on job search outcomes in the context of the turbulent East German labor market in the aftermath of the German reunification. High job destruction characterized the economic environment. JCS were heavily used in order to cushion this development. Using data from 1990-1999 and building upon the timing-of-events approach, we estimate multivariate discrete time duration models taking selection based on both observed and unobserved heterogeneity into account.Our results indicate that participation in JCS increases the unemployment duration mainly due to profound locking-in effects. However, twelve months after the program start the significantly negative impact on the job finding probability vanishes. We find evidence for effect heterogeneity. Our results suggest that female and highly skilled participants leave unemployment quicker than other groups, which results in highly skilled women benefiting from participation. However, we find no significant impact on post-unemployment employment stability. Our results are robust to allowing for random treatment effects. Also taking into account endogenous participation in training programs or multiple treatment effects do not change the results.

Keywords: active labor market policy, unemployment duration, employment stability, timing-of-events model, East Germany, transition economy

JEL Classification: J64, C41, C33

Suggested Citation

Bergemann, Annette and Pohlan, Laura and Uhlendorff, Arne, Job Creation Schemes in Turbulent Times. IZA Discussion Paper No. 10369. Available at SSRN: https://ssrn.com/abstract=2872626

Annette Bergemann (Contact Author)

University of Bristol - Department of Economics ( email )

8 Woodland Road
Bristol BS8 ITN
United Kingdom

IZA Institute of Labor Economics

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

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden

Laura Pohlan

ZEW – Leibniz Centre for European Economic Research ( email )

L 7,1
Mannheim, 68161
Germany

University of Mannheim

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

Arne Uhlendorff

IZA Institute of Labor Economics ( email )

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

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