Job Creation Schemes in Turbulent Times

Annette Bergemann, Laura Pohlan and Arne Uhlendorff

No 10369, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes the impact of job creation schemes (JCS) on job search outcomes in the context of the turbulent East German labor market in the aftermath of the German reunification. High job destruction characterized the economic environment. JCS were heavily used in order to cushion this development. Using data from 1990-1999 and building upon the timing-of-events approach, we estimate multivariate discrete time duration models taking selection based on both observed and unobserved heterogeneity into account. Our results indicate that participation in JCS increases the unemployment duration mainly due to profound locking-in effects. However, twelve months after the program start the significantly negative impact on the job finding probability vanishes. We find evidence for effect heterogeneity. Our results suggest that female and highly skilled participants leave unemployment quicker than other groups, which results in highly skilled women benefiting from participation. However, we find no significant impact on post-unemployment employment stability. Our results are robust to allowing for random treatment effects. Also taking into account endogenous participation in training programs or multiple treatment effects do not change the results.

Keywords: active labor market policy; unemployment duration; employment stability; timing-of-events model; East Germany; transition economy (search for similar items in EconPapers)
JEL-codes: C33 C41 J64 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2016-11
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (1)

Published - revised version published as 'The Impact of Participation in Job Creation Schemes in Turbulent Times' in: Labour Economics, 2017, 47, 182-201

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Related works:
Working Paper: Job creation schemes in turbulent times (2017)
Working Paper: Job Creation Schemes in Turbulent Times (2016)
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