How Do Employment Effects of Job Creation Schemes Differ with Respect to the Foregoing Unemployment Duration?

80 Pages Posted: 13 Jul 2006 Last revised: 26 Aug 2008

See all articles by Reinhard Hujer

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: 2006

Abstract

Based on new administrative data for Germany covering entrances into job creation schemes between July 2000 and May 2001, we evaluate the effects of this active labour market policy programme on the employability of the participating individuals. The programme effects are estimated considering the timing of treatment in the individual unemployment spell. Applying propensity score matching in a dynamic setting where the time until treatment in the unemployment spell is stratified into quarters, regional (East and West Germany) as well as gender differences are considered in the estimation. As matching is concerned with selection on observables only, we test the robustness of the estimates against possible unobserved influences. The results in terms of employment present a mixed picture. For West Germany, most of the estimates are insignificant at the end of the observation period, but positive exceptions are found for persons starting in the fifth or ninth quarter of the unemployment spell. For East Germany, none of the groups experiences an improvement of the labour market situation. Instead, the majority of the estimates establish negative employment effects until the end of the observation period (30 months after start of programmes). Hence, job creation schemes decrease the employment chances of the participating individuals.

Keywords: Evaluation, Active Labour Market Policy, Job Creation Schemes, Administrative Data, Propensity Score Matching, Hidden Bias

JEL Classification: J68, C14, H43

Suggested Citation

Hujer, Reinhard and Thomsen, Stephan Lothar, How Do Employment Effects of Job Creation Schemes Differ with Respect to the Foregoing Unemployment Duration? (2006). ZEW - Centre for European Economic Research Discussion Paper No. 06-047. Available at SSRN: https://ssrn.com/abstract=913948 or http://dx.doi.org/10.2139/ssrn.913948

Reinhard Hujer (Contact Author)

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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