Thumbscrews for Agencies or for Individuals? How to Reduce Unemployment

Andrey Launov () and Klaus Wälde

No 7659, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: To which extent does an increase in operating effectiveness of public employment agencies on the one hand and a reduction of unemployment benefits on the other reduce unemployment? Using the recent labour market reform in Germany as background we find that the role of unemployment benefit reduction for the reduction of unemployment is very modest (7% of the observed decline). Enhanced effectiveness of public employment agencies, to the contrary, explains a substantial part (34%) of the observed post-reform unemployment decline. If disincentive effects of PEA reforms had been avoided, the effect could have increased to 51%.

Keywords: structural model; employment agencies; unemployment benefits; labour market reform; unemployment (search for similar items in EconPapers)
JEL-codes: E24 J65 J68 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2013-09
New Economics Papers: this item is included in nep-lab and nep-mac
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Citations: View citations in EconPapers (11)

Forthcoming - substantially revised version published as 'The Employment Effect of Reforming a Public Employment Agency' in: European Economic Review, 2016, 84, 140-164

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Working Paper: Thumbscrews for Agencies or for Individuals? How to Reduce Unemployment (2013)
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