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Wage Subsidies for Needy Job-Seekers and Their Effect on Individual Labour Market Outcomes after the German Reforms

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Author Info

  • Bernhard, Sarah

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Gartner, Hermann

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Stephan, Gesine

    ()
    (Institute for Employment Research (IAB), Nuremberg)

Abstract

Our paper estimates the average effect of wage subsidies – paid to employers for a limited period of time – on the labour market prospects of needy job-seekers without access to insurance-paid 'unemployment benefit I'. The results show that wage subsidies had large and significant favourable effects: 20 months after taking up a subsidised job, the share of persons in regular employment is nearly 40 percentage points higher across participants. On the whole, groups with particular placement difficulties benefit comparatively more from subsidisation.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3772.

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Length: 27 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3772

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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Related research

Keywords: wage subsidies; unemployment benefits II for needy job-seekers; evaluation of active labour market programmes; propensity score matching;

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References

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  1. Gesine Stephan, 2008. "The Effects of Active Labor Market Programs in Germany: An Investigation Using Different Definitions of Non-Treatment," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 228(5+6), pages 586-611, December.
  2. Konle-Seidl, Regina, 2008. "Changes in the governance of employment services in Germany since 2003," IAB Discussion Paper 200810, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
  4. Cockx, Bart & Van der Linden, Bruno & Karaa, Adel, 1998. "Active Labour Market Policies and Job Tenure," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 685-708, October.
  5. Ursula Jaenichen & Gesine Stephan, 2011. "The effectiveness of targeted wage subsidies for hard-to-place workers," Applied Economics, Taylor & Francis Journals, vol. 43(10), pages 1209-1225.
  6. Wolff, Joachim & Nivorozhkin, Anton, 2008. "Start me up: The effectiveness of a self-employment programme for needy unemployed people in Germany," IAB Discussion Paper 200820, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  7. Fredriksson, Peter & Johansson, Per, 2004. "Dynamic Treatment Assignment – The Consequences for Evaluations Using Observational Data," IZA Discussion Papers 1062, Institute for the Study of Labor (IZA).
  8. Becker, Sascha O. & Caliendo, Marco, 2007. "mhbounds – Sensitivity Analysis for Average Treatment Effects," IZA Discussion Papers 2542, Institute for the Study of Labor (IZA).
  9. Bernhard, Sarah & Wolff, Joachim, 2008. "Contracting out placement services in Germany : is assignment to private providers effective for needy job-seekers?," IAB Discussion Paper 200805, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  10. Sianesi, Barbara, 2008. "Differential effects of active labour market programs for the unemployed," Labour Economics, Elsevier, vol. 15(3), pages 370-399, June.
  11. Stephan, Gesine & Zickert, Kathi, 2008. "Participation of unemployment benefit recipients in active labor market programs : before and after the German labor market reforms," IAB Discussion Paper 200815, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  12. Bernhard, Sarah & Hohmeyer, Katrin & Jozwiak, Eva & Koch, Susanne & Kruppe, Thomas & Stephan, Gesine & Wolff, Joachim, 2008. "Aktive Arbeitsmarktpolitik in Deutschland und ihre Wirkungen," IAB-Forschungsbericht 200802, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  13. Dorsett, Richard, 2006. "The new deal for young people: effect on the labour market status of young men," Labour Economics, Elsevier, vol. 13(3), pages 405-422, June.
  14. Forslund, Anders & Johansson, Per & Lindqvist, Linus, 2004. "Employment subsidies - A fast lane from unemployment to work?," Working Paper Series 2004:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  15. Barbara Sianesi, 2002. "An evaluation of the Swedish system of active labour market programmes in the 1990s," IFS Working Papers W02/01, Institute for Fiscal Studies.
  16. Heinemann, Sarah & Gartner, Hermann & Jozwiak, Eva, 2006. "Arbeitsförderung für Langzeitarbeitslose : erste Befunde zu Eingliederungsleistungen des SGB III im Rechtskreis SGB II," IAB-Forschungsbericht 200603, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  17. Neumark, David, 2008. "Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Raising Productivity," IZA Discussion Papers 3355, Institute for the Study of Labor (IZA).
  18. Wolff, Joachim & Jozwiak, Eva, 2007. "Does short-term training activate means-tested unemployment benefit recipients in Germany?," IAB Discussion Paper 200729, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  19. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  20. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 12 Feb 2014.
  21. Hummel, Elisabeth & Jacobebbinghaus, Peter & Kohlmann, Annette & Oertel, Martina & Wübbeke, Christina & Ziegerer, Manfred, 2005. "Stichprobe der Integrierten Erwerbsbiografien : IEBS 1.0, Handbuch-Version 1.0.0 (Integrated Employment Biographies Sample IEBS 1.0)," FDZ Datenreport. Documentation on Labour Market Data 200506_de, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  22. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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Citations

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Cited by:
  1. Lechner, Michael & Wunsch, Conny & Scioch, Patrycja, 2013. "Do Firms Benefit from Active Labour Market Policies?," IZA Discussion Papers 7614, Institute for the Study of Labor (IZA).
  2. Schuenemann, Benjamin & Lechner, Michael & Wunsch, Conny, 2011. "Do Long-term Unemployed Workers Benefit from Targeted Wage Subsidies," Economics Working Paper Series 1126, University of St. Gallen, School of Economics and Political Science.
  3. Marco Caliendo & Jens Hogenacker, 2012. "The German labor market after the Great Recession: successful reforms and future challenges," IZA Journal of European Labor Studies, Springer, vol. 1(1), pages 1-24, December.
  4. Caliendo, Marco, 2009. "Income Support Systems, Labor Market Policies and Labor Supply: The German Experience," IZA Discussion Papers 4665, Institute for the Study of Labor (IZA).
  5. Butschek, Sebastian & Walter, Thomas, 2013. "What active labour market programmes work for immigrants in Europe? A meta-analysis of the evaluation literature," ZEW Discussion Papers 13-056, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Zabel, Cordula, 2011. "Lone mothers' participation in labor market programs for means-tested benefit recipients in Germany," IAB Discussion Paper 201114, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  7. Heyer, Gerd & Koch, Susanne & Stephan, Gesine & Wolff, Joachim, 2011. "Evaluation der aktiven Arbeitsmarktpolitik: Ein Sachstandsbericht für die Instrumentenreform 2011 (Evaluation of active labor market programs : a summary of recent results for the German program refo," IAB Discussion Paper 201117, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  8. Rainer Eppel & Helmut Mahringer, 2013. "Do Wage Subsidies Work in Boosting Economic Inclusion? Evidence on Effect Heterogeneity in Austria," WIFO Working Papers 456, WIFO.
  9. Walter, Thomas & Butschek, Sebastian, 2013. "What Active Labour Market Programmes Work for Immigrants in Europe?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79745, Verein für Socialpolitik / German Economic Association.

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