The Curse and Blessing of Training the Unemployed in a Changing Economy: The Case of East Germany after Unification
51 Pages Posted: 28 Jul 2005
Date Written: July 2005
We analyse the effects of government-sponsored training for the unemployed conducted during East German transition. For the microeconometric analysis, we use a new, large and informative administrative database that allows us to use matching methods to reduce potential selection bias, to study different types of programmes, and to observe interesting labour market outcomes over eight years. We find that, generally, all training programmes under investigation increase long-term employment prospects and earnings. However, as an important exception, the longer training programmes are on average not helpful for their male participants. At least part of the explanation for this negative result is that caseworkers severely misjudged the structure of the future demand for skills.
Keywords: active labour market policy, nonparametric identification, matching estimation, causal effects, programme evaluation, panel data, gender differences
JEL Classification: J68
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