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Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany

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Author Info
Lena Jacobi () (RWI Essen)
Jochen Kluve () (RWI Essen and IZA Bonn)
Abstract

Having faced high unemployment rates for more than a decade, the German government implemented a comprehensive set of labour market reforms during the period 2003-2005. This paper describes the economic and institutional context of the German labour market before and after these so-called Hartz reforms. Focussing on active policy measures, we delineate the rationale for reform and its main principles. As results of programme evaluation studies post-reform have become available just now, we give a first assessment of the effectiveness of key elements of German ALMP before and after the Hartz reforms. The evidence indicates that the re-organisation of public employment services was mainly successful, with the exception of the outsourcing of services. Re-designing training programmes seems to have improved their effectiveness, while job creation schemes continue to be detrimental for participants' employment prospects. Wage subsidies and startup subsidies show significantly positive effects. On balance, therefore, the reform seems to be moving the German labour market in the right direction.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2100.

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Length: 32 pages
Date of creation: Apr 2006
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Handle: RePEc:iza:izadps:dp2100

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Related research
Keywords: Active Labour Market Policy; labour market reform; programme evaluation;

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Find related papers by JEL classification:
J0 - Labor and Demographic Economics - - General
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Michael Fertig & Jochen Kluve, 2004. "A Conceptual Framework for the Evaluation of Comprehensive Labor Market Policy Reforms in Germany," RWI Discussion Papers 0013, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
  2. Fertig, Michael & Kluve, Jochen, 2004. "A Conceptual Framework for the Evaluation of Comprehensive Labor Market Policy Reforms in Germany," IZA Discussion Papers 1099, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Michael Lechner & Martin Eichler, 1999. "An Evaluation of Public Employment Programmes in the East German State of Sachsen-Anhalt," IZA Discussion Papers 94, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Eva Reinowski & Birgit Schultz & Jürgen Wimers, 2004. "Evaluation of Further Training Programmes with an Optimal Matching Algorithm," IWH Discussion Papers 188, Halle Institute for Economic Research. [Downloadable!]
  5. Hujer, Reinhard & Caliendo, Marco & Zeiss, Christopher & Blien, Uwe, 2002. "Macroeconometric evaluation of active labour market policies in Germany - a dynamic panel approach using regional data," ERSA conference papers ersa02p225, European Regional Science Association. [Downloadable!]
    Other versions:
  6. Lechner, Michael, 1999. "Earnings and Employment Effects of Continuous Off-the-Job Training in East Germany after Unification," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 74-90, January.
  7. Fertig, Michael & Schmidt, Christoph M. & Schneider, Hilmar, 2006. "Active labor market policy in Germany--Is there a successful policy strategy?," Regional Science and Urban Economics, Elsevier, vol. 36(3), pages 399-430, May. [Downloadable!] (restricted)
    Other versions:
  8. Pfeiffer, Friedhelm & Reize, Frank, 2000. "Business start-ups by the unemployed -- an econometric analysis based on firm data," Labour Economics, Elsevier, vol. 7(5), pages 629-663, September. [Downloadable!] (restricted)
  9. Michael Lechner, 1999. "An Evaluation of Public-Sector-Sponsored Continuous Vocational Training Programs in East Germany," IZA Discussion Papers 93, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Conny Wunsch, 2005. "Labour Market Policy in Germany: Institutions, Instruments and Reforms since Unification," University of St. Gallen Department of Economics working paper series 2005 2005-06, Department of Economics, University of St. Gallen. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dominique Demougin & Carsten Helm, 2008. "Incentive Contracts and Efficient Unemployment Benefits," Darmstadt Discussion Papers in Economics 191, Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology). [Downloadable!]
    Other versions:
  2. Werner Eichhorst & Lutz C. Kaiser, 2006. "The German Labor Market: Still Adjusting Badly?," IZA Discussion Papers 2215, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Bernhard Ebbinghaus & Werner Eichhorst, 2006. "Employment Regulation and Labor Market Policy in Germany, 1991-2005," IZA Discussion Papers 2505, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Eichhorst, Werner & Zimmermann, Klaus F, 2007. "And Then There Were Four... How Many (and Which) Measures of Active Labour Market Policy Do We Still Need?," CEPR Discussion Papers 6246, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Werner Eichhorst & Klaus F. Zimmermann, 2007. "And Then There Were Four ...: How Many (and Which) Measures of Active Labor Market Policy Do We Still Need? ; Finding a Balance after the Evaluation of the Hartz Reforms in Germany," Discussion Papers of DIW Berlin 685, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  6. Martin Biewen & Bernd Fitzenberger & Aderonke Osikominu & Marie Waller, 2007. "Which Program for Whom? Evidence on the Comparative Effectiveness of Public Sponsored Training Programs in Germany," IZA Discussion Papers 2885, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Werner Eichhorst & Maria Grienberger-Zingerle & Regina Konle-Seidl, 2006. "Activation Policies in Germany: From Status Protection to Basic Income Support," IZA Discussion Papers 2514, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Manuel Frondel & Rainer Kambeck & Christoph M. Schmidt, 2006. "Hard Coal Subsidies: A Never-Ending Story?," RWI Discussion Papers 0053, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
    Other versions:
  9. Werner Eichhorst, 2007. "The Gradual Transformation of Continental European Labor Markets: France and Germany Compared," IZA Discussion Papers 2675, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Arntz, Melanie & Wilke, Ralf A., 2006. "Unemployment duration in Germany : individual and regional determinants of local job finding, migration and subsidized employment," ZEW Discussion Papers 06-92, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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