Do German Welfare-to-Work Programmes Reduce Welfare Dependency and Increase Employment?

Martin Huber, Michael Lechner, Conny Wunsch and Walter Thomas
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Walter Thomas: Centre for European Economic Research,Mannheim, Germany

German Economic Review, 2011, vol. 12, issue 2, 182-204

Abstract: During the last decade, many Western economies reformed their welfare systems with the aim of activating welfare recipients by increasing welfare-to-work programmes (WTWP) and job-search enforcement. We evaluate the short-term effects of three important German WTWP implemented after a major reform in January 2005 (‘Hartz IV’), namely short training, further training with a planned duration of up to three months and public workfare programmes (‘One-Euro-Jobs’). Our analysis is based on a combination of a large-scale survey and administrative data that is rich with respect to individual, household, agency level and regional information. We use this richness of the data to base the econometric evaluation on a selection-on-observables approach. We find that short-term training programmes, on average, increase their participants’ employment perspectives. There is also considerable effect heterogeneity across different subgroups of participants that could be exploited to improve the allocation of welfare recipients to the specific programmes and thus increase overall programme effectiveness.

Keywords: Welfare-to-work policies; propensity score matching; programme evaluation; panel data; targeting (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1111/j.1468-0475.2010.00515.x

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