Working Paper: CEPR ID: DP6306
Authors: Michael Lechner; Conny Wunsch
Abstract: We provide new evidence on the effectiveness of West German labour market programmes by evaluating training and employment programmes that have been conducted 2000-2002 after the first large reform of German labour market policy in 1998. We employ exceptionally rich administrative data that allow us to use microeconometric matching methods and to estimate interesting effects for different types of programmes and participants at a rather disaggregated level. We find that, on average, all programmes fail to improve their participants' chances of finding regular, unsubsidised employment. Rather, participants accumulate 2-13 more months of unemployment than nonparticipants over the 2.5 years following programme start, which, in addition to direct programme costs, induces net costs in terms of benefit payments and wage subsidies amounting to, on average, 1500-7000 EUR per participant. However, we show that there is some scope for improvements in mean employment rates as well as potential for considerable cost savings by a reallocation of participants and nonparticipants to the different programmes.
Keywords: Causal Effects; Matching Estimation; Panel Data; Programme Evaluation
JEL Codes: J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Participation in active labour market programmes (ALMPs) (J68) | Chances of finding regular unsubsidised employment (J68) |
| Participation in active labour market programmes (ALMPs) (J68) | Net costs in terms of benefit payments and wage subsidies (J32) |
| Better employment prospects (J68) | Lock-in effects (E43) |
| Poor employment prospects (J68) | Below-average lock-in effects (G19) |
| Shorter training programmes (M53) | Positive employment effects for participants with poor employment prospects (J68) |
| Assignment mechanism of jobseekers to programmes (J68) | Overall effectiveness of ALMPs (J68) |