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Thumbscrews for Agencies or for Individuals? How to Reduce Unemployment

Andrey Launov () and Klaus Wälde ()

No 1307, Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz

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 re- duction of unemployment is very modest (7% of the observed decline). Enhanced effectiveness of public employment agencies, to the contrary, explains a substan- tial 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: Employment agencies; unemployment benefi?ts; labour market reform; unemployment; structural model (search for similar items in EconPapers)
JEL-codes: E24 J65 J68 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2013-09-01, Revised 2013-09-01
New Economics Papers: this item is included in nep-dem, nep-lab and nep-mac
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