What Did All the Money Do? On the General Ineffectiveness of Recent West German Labour Market Programmes

By Conny Wunsch, M. Lechner. Social Science Research Network, 2008

153 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Statistics and Probability

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Citations in the corpus

Radius matching on the propensity score with bias adjustment: tuning parameters and finite sample behaviour (2014, methodology): “2 It has also been used in Wunsch and Lechner (2008), Lechner (2009), Lechner and Wunsch (2009a, b), Behncke (2010a); Behncke et al. (2010b)), and Huber et al. (2011). estimator’s distribution can be adequately approximated by the normal distribution, which is relevant for inference.”
Unobservable, but unimportant? The relevance of usually unobserved variables for the evaluation of labor market policies☆ (2017, background): “Previous studies find positive effects only in the very long-run (e.g. Fitzenberger et al., 2008; Lechner et al., 2011) or even partly negative effects on employment (e.g. Lechner and Wunsch, 2008).”
The performance of estimators based on the propensity score (2013, methodology): “See Appendix A.1 for all details.”
Start-Up Subsidies for the Unemployed: Long-Term Evidence and Effect Heterogeneity (2011, background): “Although positive results with respect to income and employment prospects were found occasionally, the overall evidence indicates that the effects of those traditional measures are rather disappointing (see Martin and Grubb, 2001; Dar and Gill, 1998; Dar and Tzannatos, 1999; or Fay, 1996 for…”