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Should Welfare Administration be Centralized or Decentralized? Evidence from a Policy Experiment

Author

Listed:
  • Boockmann Bernhard

    (Institute for Applied Economic Research (IAW), Tübingen, Germany)

  • Walter Thomas

    (Centre for European Economic Research (ZEW), Mannheim, Germany)

  • Huber Martin

    (University of St. Gallen, St. Gallen, Switzerland)

  • Thomsen Stephan L.

    (Lower Saxony Institute for Economic Research (NIW), Hannover, Germany)

  • Göbel Christian

    (University of Applied Labour Studies of the Federal Employment Agency, Mannheim, Germany)

Abstract

The 2005 reform of the German welfare system introduced two competing organizational models for welfare administration. In most districts, a centralized organization was established where local welfare agencies are bound to central directives. At the same time, 69 districts were allowed to opt for a decentralized organization. We evaluate the relative success of both types in terms of integrating welfare recipients into employment. Compared to centralized organization, decentralized organization has a negative effect on employment chances of males. For women, no significant effect is found. These findings are robust to the inclusion of aspects of internal organization common to both types of agencies.

Suggested Citation

  • Boockmann Bernhard & Walter Thomas & Huber Martin & Thomsen Stephan L. & Göbel Christian, 2015. "Should Welfare Administration be Centralized or Decentralized? Evidence from a Policy Experiment," German Economic Review, De Gruyter, vol. 16(1), pages 13-42, February.
    • Handle: RePEc:bpj:germec:v:16:y:2015:i:1:p:13-42
    DOI: 10.1111/geer.12021
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    References listed on IDEAS

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    1. W. Eichhorst & M. Grienberger-Zingerle & R. Konle-Seidl, 2008. "Activation Policies in Germany: From Status Protection to Basic Income Support," Springer Books, in: Werner Eichhorst & Otto Kaufmann & Regina Konle-Seidl (ed.), Bringing the Jobless into Work?, pages 17-67, Springer.
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    Cited by:

    1. Mergele, Lukas & Weber, Michael, 2020. "Public employment services under decentralization: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 182(C).
    2. Lukas Mergele, 2016. "Are there gains from decentralizing public employment offices?," Working Papers 2015020, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    3. Lukas Mergele & Michael Weber & Michael Weber, 2020. "Job Center: Opting Municipalities Are Less Likely to Place the Unemployed in Employment," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(02), pages 39-44, February.
    4. Jeremias Nieminen & Ohto Kanninen & Hannu Karhunen, 2023. "The decentralization of public employment services and local governments’ responses to incentives," Journal of Economic Geography, Oxford University Press, vol. 23(6), pages 1371-1395.
    5. Christian Holzner & Sonja Munz, 2013. "Should local public employment services be merged with local social benefit administrations? [Sollten kommunale Arbeitsvermittlungsagenturen mit der kommunalen Sozialverwaltung fusioniert werden?]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 46(2), pages 83-102, June.
    6. Regina T. Riphahn & Christoph Wunder, 2016. "State dependence in welfare receipt: transitions before and after a reform," Empirical Economics, Springer, vol. 50(4), pages 1303-1329, June.
    7. Ohto Kanninen & Hannu Karhunen & Jeremias Nieminen, "undated". "Effect of Secondary Education on Cognitive and Non-cognitive Skills," Working Papers 337, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    8. Oliver Falck & Siegfried Schönherr, 2016. "An Economic Reform Agenda for Croatia: a comprehensive economic reform package prepared for the Croatian Statehood Foundation," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 70.
    9. Michael Weber, 2016. "The short-run and long-run effects of decentralizing public employment services," ifo Working Paper Series 209, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    10. Ohto Kanninen & Hannu Karhunen & Jeremias Nieminen, 2021. "Behavior and Effectiveness of Decentralized Employment Offices," Working Papers 332, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    11. Wolfgang Nagl & Michael Weber, 2016. "Stuck in a trap? Long-term unemployment under two-tier unemployment compensation schemes," ifo Working Paper Series 231, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    12. Mergele, Lukas & Weber, Michael, 2020. "Public employment services under decentralization: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 182(C).

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    More about this item

    Keywords

    Welfare System; organization; decentralization; labor market integration;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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