Bringing the unemployed back to work in Germany: training programs or wage subsidies?

Renate Neubäumer

International Journal of Manpower, 2012, vol. 33, issue 2, 159-177

Abstract: Purpose - The purpose of this paper is to theoretically and empirically investigate the relative effects of wage subsidies and further vocational training on employment prospects. Design/methodology/approach - The paper adopts a theoretical approach that discusses the effects of two major active labor market programs; empirical test using a large administrative data set from Germany and statistical matching techniques. Findings - Previously subsidized individuals and trained individuals who found a job immediately afterwards have the same employment rates. Practical implications - Firms value training on a subsidized job as much as formal training programs. Originality/value - The paper presents a model that draws attention to the role of hiring decisions of firms and to the formation of human capital by training programs and by training on subsidized jobs; estimation of relative average treatment effects on thedifferentiallytreated, i.e. participants of two active labor market programs; and comparisons not only of all unemployed but also of unemployed persons taking‐up or keeping a job after program end.

Keywords: Germany; Unemployment; Labour market; Training management; Evaluation of active labour market programmes; Training programmes; Wage subsidies; Propensity score matching (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:v:33:y:2012:i:2:p:159-177

DOI: 10.1108/01437721211225417

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