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

Conny Wunsch and Michael Lechner

No 2800, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: matching estimation; causal effects; programme evaluation; panel data (search for similar items in EconPapers)
JEL-codes: J68 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2007-05
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (15)

Published - published in: Kyklos, 2008, 61 (1), 134-174

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Journal Article: What Did All the Money Do? On the General Ineffectiveness of Recent West German Labour Market Programmes (2008)
Working Paper: What Did All the Money Do? On the General Ineffectiveness of Recent West German Labour Market Programmes (2007)
Working Paper: What Did All the Money Do? On the General Ineffectiveness of Recent West German Labour Market Programmes (2007)
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