IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp6222.html
   My bibliography  Save this paper

Fighting Youth Unemployment: The Effects of Active Labor Market Policies

Author

Listed:
  • Caliendo, Marco

    (University of Potsdam)

  • Künn, Steffen

    (Maastricht University)

  • Schmidl, Ricarda

    (PwC Deutschland)

Abstract

A substantial number of young unemployed participate in active labor market programs (ALMP) in Germany each year. While the aims of these programs are clear – a fast re-integration into employment or enrollment in further education – a comprehensive analysis of their effectiveness has yet to be conducted. We fill this gap using administrative data on youth unemployment entries in 2002 and analyze the short- and long-term impacts for a variety of different programs. With informative data at hand we apply inverse probability weighting, thereby accounting for a dynamic treatment assignment and cyclical availability of programs. Our results indicate positive long-term employment effects for nearly all measures aimed at labor market integration. Measures aimed at integrating youths in apprenticeships are effective in terms of education participation, but fail to show any impact on employment outcomes until the end of our observation period. Public sector job creation is found to be harmful for the medium-term employment prospects and ineffective in the long-run. Our analysis further indicates that the targeting of German ALMP systematically ignores low-educated youths as neediest of labor market groups. While no employment program shows a positive impact on further education participation for any subgroup, the employment impact of participation is often significantly lower for low-educated youths.

Suggested Citation

  • Caliendo, Marco & Künn, Steffen & Schmidl, Ricarda, 2011. "Fighting Youth Unemployment: The Effects of Active Labor Market Policies," IZA Discussion Papers 6222, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6222
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp6222.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Richard K. Crump & V. Joseph Hotz & Guido W. Imbens & Oscar A. Mitnik, 2009. "Dealing with limited overlap in estimation of average treatment effects," Biometrika, Biometrika Trust, vol. 96(1), pages 187-199.
    2. Quintini, Glenda & Martin, John P. & Martin, Sébastien, 2007. "The Changing Nature of the School-to-Work Transition Process in OECD Countries," IZA Discussion Papers 2582, Institute of Labor Economics (IZA).
    3. Huber, Martin & Lechner, Michael & Wunsch, Conny, 2010. "How to Control for Many Covariates? Reliable Estimators Based on the Propensity Score," IZA Discussion Papers 5268, Institute of Labor Economics (IZA).
    4. Bernd Fitzenberger & Stefan Speckesser, 2007. "Employment effects of the provision of specific professional skills and techniques in Germany," Empirical Economics, Springer, vol. 32(2), pages 529-573, May.
    5. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    6. Fredriksson, Peter & Johansson, Per, 2008. "Dynamic Treatment Assignment," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 435-445.
    7. Fredriksson, Peter & Johansson, Per, 2002. "Program evaluation and random program starts," Working Paper Series 2003:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    8. Korpi, Tomas, 1997. "Is utility related to employment status? Employment, unemployment, labor market policies and subjective well-being among Swedish youth," Labour Economics, Elsevier, vol. 4(2), pages 125-147, June.
    9. Lechner, Michael & Wunsch, Conny, 2013. "Sensitivity of matching-based program evaluations to the availability of control variables," Labour Economics, Elsevier, vol. 21(C), pages 111-121.
    10. Marco Caliendo & Armin Falk & Lutz C. Kaiser & Hilmar Schneider & Arne Uhlendorff & Gerard van den Berg & Klaus F. Zimmermann, 2011. "The IZA Evaluation Dataset: towards evidence‐based labor policy making," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(7), pages 731-752, October.
    11. Michael Lechner & Ruth Miquel & Conny Wunsch, 2011. "Long‐Run Effects Of Public Sector Sponsored Training In West Germany," Journal of the European Economic Association, European Economic Association, vol. 9(4), pages 742-784, August.
    12. Goldsmith, Arthur H. & Veum, Jonathan R. & Darity, William Jr., 1997. "Unemployment, joblessness, psychological well-being and self-esteem: Theory and evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 26(2), pages 133-158.
    13. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    14. Centeno, Luis & Centeno, Mário & Novo, Álvaro A., 2009. "Evaluating job-search programs for old and young individuals: Heterogeneous impact on unemployment duration," Labour Economics, Elsevier, vol. 16(1), pages 12-25, January.
    15. Thomas Brodaty & Bruno Crépon & Denis Fougère, 2000. "Using Matching Estimators to Evaluate Alternative Youth Employment Programs : Evidence from France, 1986-1988," Working Papers 2000-25, Center for Research in Economics and Statistics.
    16. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    17. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    18. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, vol. 71(5), pages 1491-1517, September.
    19. Jacobi, Lena & Kluve, Jochen, 2007. "Before and after the Hartz reforms: The performance of active labour market policy in Germany," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(1), pages 45-64.
    20. Gregg, Paul & Tominey, Emma, 2005. "The wage scar from male youth unemployment," Labour Economics, Elsevier, vol. 12(4), pages 487-509, August.
    21. Black, Dan A. & Smith, J.A.Jeffrey A., 2004. "How robust is the evidence on the effects of college quality? Evidence from matching," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 99-124.
    22. Busso, Matias & DiNardo, John & McCrary, Justin, 2009. "New Evidence on the Finite Sample Properties of Propensity Score Matching and Reweighting Estimators," IZA Discussion Papers 3998, Institute of Labor Economics (IZA).
    23. Bell, David N.F. & Blanchflower, David G., 2010. "Youth Unemployment: Déjà Vu?," IZA Discussion Papers 4705, Institute of Labor Economics (IZA).
    24. Jacobi, Lena & Kluve, Jochen, 2007. "Before and after the Hartz reforms: The performance of active labour market policy in Germany," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(1), pages 45-64.
    25. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
    26. Fredriksson, Peter & Johansson, Per, 2004. "Dynamic Treatment Assignment – The Consequences for Evaluations Using Observational Data," IZA Discussion Papers 1062, Institute of Labor Economics (IZA).
    27. Simon Burgess & Carol Propper & Hedley Rees & Arran Shearer, 1999. "The Class of '81: The effects of early-career unemployment on subsequent unemployment experiences," CASE Papers 032, Centre for Analysis of Social Exclusion, LSE.
    28. Jacobi, Lena & Kluve, Jochen, 2007. "Before and after the Hartz reforms: The performance of active labour market policy in Germany," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(1), pages 45-64.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ulf Rinne & Arne Uhlendorff & Zhong Zhao, 2013. "Vouchers and caseworkers in training programs for the unemployed," Empirical Economics, Springer, vol. 45(3), pages 1089-1127, December.
    2. Lechner, Michael & Wunsch, Conny, 2013. "Sensitivity of matching-based program evaluations to the availability of control variables," Labour Economics, Elsevier, vol. 21(C), pages 111-121.
    3. Caliendo, Marco & Künn, Steffen, 2011. "Start-up subsidies for the unemployed: Long-term evidence and effect heterogeneity," Journal of Public Economics, Elsevier, vol. 95(3), pages 311-331.
    4. Marco Caliendo & Steffen Künn, 2015. "Getting back into the labor market: the effects of start-up subsidies for unemployed females," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(4), pages 1005-1043, October.
    5. Caliendo, Marco & Mahlstedt, Robert & Mitnik, Oscar A., 2017. "Unobservable, but unimportant? The relevance of usually unobserved variables for the evaluation of labor market policies," Labour Economics, Elsevier, vol. 46(C), pages 14-25.
    6. Stephan L. Thomsen & Thomas Walter, 2010. "Temporary Extra Jobs for Immigrants: Merging Lane to Employment or Dead‐End Road in Welfare?," LABOUR, CEIS, vol. 24(s1), pages 114-140, December.
    7. Hugo Bodory & Lorenzo Camponovo & Martin Huber & Michael Lechner, 2020. "The Finite Sample Performance of Inference Methods for Propensity Score Matching and Weighting Estimators," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 38(1), pages 183-200, January.
    8. Dettmann, E. & Becker, C. & Schmeißer, C., 2011. "Distance functions for matching in small samples," Computational Statistics & Data Analysis, Elsevier, vol. 55(5), pages 1942-1960, May.
    9. Schmidl, Ricarda, 2015. "The Effectiveness of Early Vacancy Information in the Presence of Monitoring and ALMP," IZA Discussion Papers 9575, Institute of Labor Economics (IZA).
    10. Caliendo Marco & Hujer Reinhard & Thomsen Stephan L., 2006. "Sectoral Heterogeneity in the Employment Effects of Job Creation Schemes in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(2), pages 139-179, April.
    11. Paul Muller & Bas van der Klaauw & Arjan Heyma, 2020. "Comparing econometric methods to empirically evaluate activation programs for job seekers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(5), pages 526-547, August.
    12. Marco Caliendo & Stefan Tübbicke, 2020. "New evidence on long-term effects of start-up subsidies: matching estimates and their robustness," Empirical Economics, Springer, vol. 59(4), pages 1605-1631, October.
    13. Aldashev, Alisher & Thomsen, Stephan L. & Walter, Thomas, 2010. "Short-term training programs for immigrants: do effects differ from natives and why?," ZEW Discussion Papers 10-021, ZEW - Leibniz Centre for European Economic Research.
    14. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    15. Marco Caliendo & Stefan Tübbicke, 2019. "Do Start-Up Subsidies for the Unemployed Affect Participants’ Well-Being? A Rigorous Look at (Un-)Intended Consequences of Labor Market Policies," CEPA Discussion Papers 14, Center for Economic Policy Analysis.
    16. Biewen, Martin & Fitzenberger, Bernd & Osikominu, Aderonke & Völter, Robert & Waller, Marie, 2006. "Beschäftigungseffekte ausgewählter Maßnahmen der beruflichen Weiterbildung in Deutschland : eine Bestandsaufnahme (Effects of selected measures of further vocational training in Germany : an appraisal," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 39(3/4), pages 365-390.
    17. Michael Lechner & Conny Wunsch, 2009. "Are Training Programs More Effective When Unemployment Is High?," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 653-692, October.
    18. Marco Caliendo & Ricarda Schmidl, 2016. "Youth unemployment and active labor market policies in Europe," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-30, December.
    19. Katharina Dengler, 2019. "Effectiveness of sequences of classroom training for welfare recipients: what works best in West Germany?," Applied Economics, Taylor & Francis Journals, vol. 51(1), pages 1-46, January.
    20. Fitzenberger, Bernd & Volter, Robert, 2007. "Long-run effects of training programs for the unemployed in East Germany," Labour Economics, Elsevier, vol. 14(4), pages 730-755, August.

    More about this item

    Keywords

    youth unemployment; active labor market policy; program evaluation; propensity score weighting;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6222. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.