The Employment Effects of Job Creation Schemes in Germany: A Microeconometric Evaluation

51 Pages Posted: 8 Mar 2005

See all articles by Marco Caliendo

Marco Caliendo

University of Potsdam; Institute for the Study of Labor (IZA)

Reinhard Hujer

University of Frankfurt; IZA Institute of Labor Economics

Stephan L. Thomsen

Leibniz Universität Hannover - Institute of Economics; IZA Institute of Labor Economics; ZEW – Leibniz Centre for European Economic Research - Labour Markets, Human Resources and Social Policy Department

Date Written: March 2005

Abstract

In this paper we evaluate the employment effects of job creation schemes on the participating individuals in Germany. Job creation schemes are a major element of active labour market policy in Germany and are targeted at long-term unemployed and other hard-to-place individuals. Access to very informative administrative data of the Federal Employment Agency justifies the application of a matching estimator and allows to account for individual (group-specific) and regional effect heterogeneity. We extend previous studies in four directions. First, we are able to evaluate the effects on regular (unsubsidised) employment. Second, we observe the outcome of participants and non-participants for nearly three years after programme start and can therefore analyse mid- and long-term effects. Third, we test the sensitivity of the results with respect to various decisions which have to be made during implementation of the matching estimator, e.g. choosing the matching algorithm or estimating the propensity score. Finally, we check if a possible occurrence of 'unobserved heterogeneity' distorts our interpretation. The overall results are rather discouraging, since the employment effects are negative or insignificant for most of the analysed groups. One notable exception are long-term unemployed individuals who benefit from participation. Hence, one policy implication is to address programmes to this problem group more tightly.

Keywords: evaluation, matching, sensitivity analysis, job creation schemes, long-term unemployed

JEL Classification: J68, H43, C13

Suggested Citation

Caliendo, Marco and Hujer, Reinhard and Thomsen, Stephan Lothar, The Employment Effects of Job Creation Schemes in Germany: A Microeconometric Evaluation (March 2005). IZA Discussion Paper No. 1512. Available at SSRN: https://ssrn.com/abstract=680606

Marco Caliendo (Contact Author)

University of Potsdam ( email )

August-Bebel Strasse 89
Potsdam, 14482
Germany
+49(0)331/9773225 (Phone)
+49(0)331/9773210 (Fax)

HOME PAGE: http://www.uni-potsdam.de/en/empwifo/news.html

Institute for the Study of Labor (IZA) ( email )

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

Reinhard Hujer

University of Frankfurt ( email )

Institute for Statistics and Econometrics
60054 Frankfurt
Germany
+49 798 23673 (Fax)

IZA Institute of Labor Economics

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

Stephan Lothar Thomsen

Leibniz Universität Hannover - Institute of Economics ( email )

United States

IZA Institute of Labor Economics ( email )

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

ZEW – Leibniz Centre for European Economic Research - Labour Markets, Human Resources and Social Policy Department ( email )

P.O.Box 10 34 43
D-68034
Germany

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