Composite indicator of German regional policy and its use for optimizing subsidies to regional labour markets
AbstractGerman structural policy is characterized by a composite indicator with three targets:(1) minimization of unemployment, (2) maximization of GDP, and (3) equalization of regional unemployment rates. The composite indicator with given target weights is maximized subject to budget constraints and some administrative restrictions. The optimal combinations of target indices obtained for variable weight ratios are to be considered by a policy maker who thereby makes the final choice among already optimized outcomes, not being burdened with adjusting the target weights. The optimization is performed for econometric predictions-2004 which are derived from regional data for 1994-2002. Comparing with the optimal budget distribution, the efficiency of the actual "manual" budget distribution in 2000-2002 is about 4%, that is, the results actually obtained for 6 Bio. EUR could be obtained for 241 Mio.EUR (= 4% of the actual budget). Such a bad implementation of active labour market policies can be responsible for their low efficiency reported in some empirical studies and misinterpreted as their uselessness. Besides, it is found that the most productive jobs (most contributing to GDP) require least subsidies. Finally, taxes expected from new jobs allow to consider the problem from a managerial viewpoint. In particular, the government can maximize tax returns from investments in labour market policies. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung in its series WSI Discussion Papers with number 138.
Date of creation: 2005
Date of revision:
European Commission; structural funds; regional policy; active labour market policies; equalizing regional unemployment rates; economic growth;
Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
- R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
- R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
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.:
- Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-93.
- Hujer, Reinhard & Caliendo, Marco & Thomsen, Stephan L., 2003.
"New Evidence on the Effects of Job Creation Schemes in Germany - A Matching Approach with Threefold Heterogeneity,"
IZA Discussion Papers
750, Institute for the Study of Labor (IZA).
- Hujer, Reinhard & Caliendo, Marco & Thomsen, Stephan L., 2004. "New evidence on the effects of job creation schemes in Germany--a matching approach with threefold heterogeneity," Research in Economics, Elsevier, vol. 58(4), pages 257-302, December.
- Frisch, Ragnar, 1970.
"From Utopian Theory to Practical Applications: The Case of Econometrics,"
Nobel Prize in Economics documents
1969-1, Nobel Prize Committee.
- Frisch, Ragnar, 1981. "From Utopian Theory to Practical Applications: The Case of Econometrics," American Economic Review, American Economic Association, vol. 71(6), pages 1-16, Special I.
- Alfred Kleinknecht & Kees Van Montfort & Erik Brouwer, 2002. "The Non-Trivial Choice between Innovation Indicators," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(2), pages 109-121.
- Rustem, Berc & Velupillai, Kumaraswamy, 1984. "Cooperation between politicians and econometricians and the search for optimal economic policy," Journal of Policy Modeling, Elsevier, vol. 6(3), pages 341-350, August.
- Decressin, Jorg & Fatas, Antonio, 1995.
"Regional labor market dynamics in Europe,"
European Economic Review,
Elsevier, vol. 39(9), pages 1627-1655, December.
- John P. Martin, 1998.
"What Works Among Active Labour Market Policies: Evidence From OECD Countries' Experiences,"
OECD Labour Market and Social Policy Occasional Papers
35, OECD Publishing.
- John P Martin, 1998. "What Works Among Active Labour Market Policies: Evidence from OECD Countries' Experiences," RBA Annual Conference Volume, in: Guy Debelle & Jeff Borland (ed.), Unemployment and the Australian Labour Market Reserve Bank of Australia.
- Burridge, Peter & Gordon, Ian Richard, 1981. "Unemployment in the British Metropolitan Labour Areas," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 274-97, July.
- 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.
- C Bean, 1992.
"European Unemployment: A Survey,"
CEP Discussion Papers
dp0071, Centre for Economic Performance, LSE.
- Tangian, Andranik, 2004. "A model for ordinally constructing additive objective functions," European Journal of Operational Research, Elsevier, vol. 159(2), pages 476-512, December.
- Knox Lovell, C. A. & Pastor, Jesus T. & Turner, Judi A., 1995. "Measuring macroeconomic performance in the OECD: A comparison of European and non-European countries," European Journal of Operational Research, Elsevier, vol. 87(3), pages 507-518, December.
- Elhorst, J.P., 2000. "Dynamic models in space and time," Research Report 00C16, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- John Bradley & Gerhard Untiedt & Edgar Morgenroth, 2003.
"Macro-regional evaluation of the structural funds using the Hermin modelling framework,"
FrancoAngeli Editore, vol. 2003(3).
- John Bradley & Edgar Morgenroth & Gerhard Untiedt, 2003. "Macro-Regional Evaluation of the Structural Funds Using the HERMIN Modelling Framework," Papers WP152, Economic and Social Research Institute (ESRI).
- John Bradley & Edgar Morgenroth & Gerhard Untiedt, 2003. "Macro-regional evaluation of the Structural Funds using the HERMIN modelling framework," ERSA conference papers ersa03p313, European Regional Science Association.
- Fertig, Michael & Schmidt, Christoph M. & Schneider, Hilmar, 2002.
"Active Labor Market Policy in Germany – Is There a Successful Policy Strategy?,"
IZA Discussion Papers
576, Institute for the Study of Labor (IZA).
- 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.
- Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
- Taylor, Jim & Bradley, Steve, 1997. "Unemployment in Europe: A Comparative Analysis of Regional Disparities in Germany, Italy and the UK," Kyklos, Wiley Blackwell, vol. 50(2), pages 221-45.
- Molho, Ian, 1995. "Migrant Inertia, Accessibility and Local Unemployment," Economica, London School of Economics and Political Science, vol. 62(245), pages 123-32, February.
- Johnson, George E, 1985. " The Economic Theory of Trade Unions-An Introductory Survey: Comment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 194-96.
- 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.
- Elhorst, J. Paul, 2000.
"The Mystery Of Regional Unemployment Differentialsa Survey Of Theoretical And Empirical Explanations,"
ERSA conference papers
ersa00p60, European Regional Science Association.
- Elhorst, J. Paul, 2001. "The mystery of regional unemployment differentials : a survey of theoretical and empirical explanations," Research Report 00C06, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
- Michelle Baddeley & Ron Martin & Peter Tyler, 1998. "Transitory shock or structural shift? The impact of the early 1980s recession on British regional unemployment," Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 19-30.
- Marston, Stephen T, 1985. "Two Views of the Geographic Distribution of Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 100(1), pages 57-79, February.
- Laurens Cherchye, 2001. "Using data envelopment analysis to assess macroeconomic policy performance," Applied Economics, Taylor & Francis Journals, vol. 33(3), pages 407-416.
- Stephen Fothergill, 2001. "The True Scale of the Regional Problem in the UK," Regional Studies, Taylor & Francis Journals, vol. 35(3), pages 241-246.
- Ron Martin, 1997. "Regional Unemployment Disparities and their Dynamics," Regional Studies, Taylor & Francis Journals, vol. 31(3), pages 237-252.
- J. Taylor, . "Regional Problems and Policies: An Overview," Working Papers ec27/90, Department of Economics, University of Lancaster.
- Seifert, Hartmut & Tangian, Andranik, 2007. "Flexicurity: Reconciling Social Security with Flexibility - Empirical Findings for Europe," WSI Discussion Papers 154, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
- Tangian, Andranik & Seifert, Hartmut, 2006. "Globalization and deregulation : Does flexicurity protect atypically employed?," WSI Discussion Papers 143, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
- Tangian, Andranik, 2007. "Flexibility-Flexicurity-Flexinsurance: Response to the European Commission's Green Paper "Modernising Labour Law to Meet the Challenges of the 21st Century"," WSI Discussion Papers 149, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
- Tangian, Andranik, 2012. "Statistical test for the mathematical theory of democracy," WSI Discussion Papers 179, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
- Tangian, Andranik, 2008. "On the European readiness for flexicurity: Empirical evidence with OECD/HBS methodologies and reform proposals," WSI Discussion Papers 160, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.