The employment effects of job-creation schemes in Germany: A microeconometric evaluation

Marco Caliendo; Reinhard Hujer; Stephan L. Thomsen

doi:10.1016/S0731-9053(07)00013-8

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Advances in Econometrics

ISSN: 0731-9053
Series editor(s): Thomas B. Fomby, R. Carter Hill, Ivan Jeliazkov, Juan Carlos Escanciano and Eric Hillebrand

Subject Area: Economics

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The employment effects of job-creation schemes in Germany: A microeconometric evaluation

Document Information:
Title:	The employment effects of job-creation schemes in Germany: A microeconometric evaluation
Author(s):	Marco Caliendo, Reinhard Hujer, Stephan L. Thomsen
Volume:	21 Editor(s): Tom Fomby, R. Carter Hill, Daniel L. Millimet, Jeffrey A. Smith, Edward J. Vytlacil ISBN: 978-0-7623-1380-8 eISBN: 978-1-84950-523-9
Citation:	Marco Caliendo, Reinhard Hujer, Stephan L. Thomsen (2008), The employment effects of job-creation schemes in Germany: A microeconometric evaluation, in Tom Fomby, R. Carter Hill, Daniel L. Millimet, Jeffrey A. Smith, Edward J. Vytlacil (ed.) Modelling and Evaluating Treatment Effects in Econometrics (Advances in Econometrics, Volume 21), Emerald Group Publishing Limited, pp.381-428
DOI:	10.1016/S0731-9053(07)00013-8 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
Abstract:	In this chapter, we evaluate the employment effects of job-creation schemes (JCS) on the participating individuals in Germany. JCS are a major element of active labour market policy in Germany and are targeted at long-term unemployed and other hard-to-place individuals. Access to very informative administrative data of the Federal Employment Agency justifies the application of a matching estimator and allows us to account for individual (group-specific) and regional effect heterogeneity. We extend previous studies for Germany in four directions. First, we are able to evaluate the effects on regular (unsubsidised) employment. Second, we observe the outcomes of participants and non-participants for nearly three years after the programme starts and can therefore analyse medium-term effects. Third, we test the sensitivity of the results with respect to various decisions that have to be made during implementation of the matching estimator. Finally, we check if a possible occurrence of a specific form of ‘unobserved heterogeneity’ distorts our interpretation. The overall results are rather discouraging, since the employment effects are negative or insignificant for most of the analysed groups. One exception are long-term unemployed individuals who benefit from participation at the end of our observation period. Hence, one policy implication is to address the programmes to this problem group more closely.