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

Author

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  • Renate Neubäumer

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.

Suggested Citation

  • Renate Neubäumer, 2012. "Bringing the unemployed back to work in Germany: training programs or wage subsidies?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 33(2), pages 159-177, May.
    • Handle: RePEc:eme:ijmpps:v:33:y:2012:i:2:p:159-177
    DOI: 10.1108/01437721211225417
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