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Macroeconometric evaluation of active labour market policies in Germany - a dynamic panel approach using regional data

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  • Hujer, Reinhard

    ()

  • Caliendo, Marco

    ()

  • Zeiss, Christopher

    ()

  • Blien, Uwe

    ()

Abstract

Most evaluation studies of active labour market policies (ALMP) focus on the microeconometric evaluation approach and work with individual data. The main question is if the interesting outcome variable for an individual is affected by the participation in an ALMP programme. That being done, the direct gain can be compared with the associated costs and the success of the programme can be judged. However, microeconometric approaches estimate in nearly all cases the effect of treatment on the treated, ignoring impacts on the non-participants. Therefore this type of analysis should only be seen as a first step of a complete evaluation, because general equilibrium effects are neglected. These are very likely to occur regarding the immense amounts spend on ALMP in Germany. One possible solution to overcome the pitfalls of the microeconometric approach is to carry out a macroeconometric analysis. Instead of looking at the effect on individuals performance we would like to know if the ALMPs represent a net gain to the whole economy. This is likely to be the case only, if the total number of jobs is positively affected by labour market policies. Empirical work on the macroeconomic effects of ALMPs is rare and this might be due to several reasons. The first obstacle is the absence of an obvious theoretical framework within which to couch the analysis. Leaving the traditional way of 'cheating the Phillips curve' aside we use a standard labour market framework to consider the effects of ALMP on the matching, the job creation and the wage setting process. A second problem which has to be solved is the inherent simultaneity problem. Spending on ALMP should influence the labo market situation but might also be determined by it. One way to solve this, is an instrumental variable approach, where the issue of finding the right instruments is of major importance. A further problem is the availability of suitable data, whic allows to take regional heterogeneity into account. Especially in Germany this is problematic due to permanent adjustments in th regional delimitations of the labour office districts (Arbeitsamtsbezirke). In contrast to other evaluation studies we use adjusted data, which is corrected for these changes. This should allow us to obtain more accurate results. The aim of the study is to add a new perspective to the evaluation of ALMP in Germany. This is done by using regional data to obtain macroeconomic or net-effects of these measures. We hope to give advice for future policy implementation.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa02p225.

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Date of creation: Aug 2002
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Handle: RePEc:wiw:wiwrsa:ersa02p225

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Citations

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Cited by:
  1. Reinhard Hujer & Marco Caliendo, 2003. "Lohnsubventionen in Deutschland: wie sieht eine optimale Evaluierungsstrategie aus?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(1), pages 109-123.
  2. Hujer, Reinhard & Zeiss, Christopher, 2003. "Macroeconomic Impacts of ALMP on the Matching Process in West Germany," IZA Discussion Papers 915, Institute for the Study of Labor (IZA).
  3. Brown, Alessio J. G. & Koettl, Johannes, 2012. "Active Labor Market Programs: Employment Gain or Fiscal Drain?," IZA Discussion Papers 6880, Institute for the Study of Labor (IZA).
  4. Hagen, Tobias, 2003. "Three Approaches to the Evaluation of Active Labour Market Policy in East Germany Using Regional Data," ZEW Discussion Papers 03-27, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Zubović, Jovan & Simeunović, Ivana, 2012. "On the New Methodology of Cost‐Benefit Analysis of ALMP – The Case of Serbia," MPRA Paper 42532, University Library of Munich, Germany.
  6. Michael Fertig, 2004. "The Effectiveness of Qualification Measures for Employed Workers – An Evaluation Study for Saxony," RWI Discussion Papers 0010, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  7. repec:iab:iabzaf:v:39:i:3/4:p:575-601 is not listed on IDEAS
  8. Jovan, Zubovic & Jonel, Subic, 2011. "Reviewing development of active labour market policies and the evaluation techniques," MPRA Paper 35282, University Library of Munich, Germany, revised 17 Oct 2011.
  9. Carlo Altavilla & Floro Ernesto Caroleo, 2013. "Asymmetric Effects of National-based Active Labour Market Policies," Regional Studies, Taylor & Francis Journals, vol. 47(9), pages 1482-1506, October.
  10. Konle-Seidl, Regina, 2005. "Lessons learned: Internationale Evaluierungsergebnisse zu Wirkungen aktiver und aktivierender Arbeitsmarktpolitik," IAB-Forschungsbericht 200509, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  11. Jochen Kluve & Lena Jacobi, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," RWI Discussion Papers 0041, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  12. Carlo Altavilla & Floro Ernesto Caroleo, 2006. "Evaluating the Dynamic Effects of Active Labour Policies in Italy," Discussion Papers 8_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
  13. Fertig, Michael & Kluve, Jochen & Schmidt, Christoph M., 2006. "Die makroökonomische Wirkung aktiver Arbeitsmarktpolitik : eine Panelanalyse auf Ebene regionaler Arbeitsmärkte (The macroeconomic impact of active labor market policy : a longitudinal analysis for ," 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 575-601.
  14. David C Maré, 2005. "Indirect Effects of Active Labour Market Policies," HEW 0509004, EconWPA.
  15. René Fahr & Uwe Sunde, 2009. "Did the Hartz Reforms Speed-Up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions," German Economic Review, Verein für Socialpolitik, vol. 10, pages 284-316, 08.
  16. Iva Tomic, 2012. "The Efficiency of the Matching Process: Exploring the Impact of Regional Employment Offices in Croatia," Working Papers 1204, The Institute of Economics, Zagreb.
  17. Blien, Uwe & Hirschenauer, Franziska & Phan thi Hong, Van, 2006. "Model-based classification of regional labour markets : for purposes of labour market policy," IAB Discussion Paper 200629, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  18. Arntz, Melanie, 2005. "The Geographical Mobility of Unemployed Workers: Evidence from West Germany," ZEW Discussion Papers 05-34, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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