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Regional Discontinuities and the Effectiveness of Further Training Subsidies for Low-Skilled Employees

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  • Christine Dauth

Abstract

The author analyzes the effects of further training subsidies for low-skilled employees on individual labor market outcomes in Germany. Using detailed administrative data, the author exploits cross-regional variation in the policy styles of local employment agencies to identify causal effects of program participation. Findings show that training subsidies significantly increase cumulative employment duration and earnings in the short run and middle run for compliers, that is, those workers who additionally participate due to a more generous policy style in their agency. These gains are particularly pronounced for certain subgroups, such as women. A rough cost-benefit analysis, however, suggests that the program overall is not beneficial for the public budget.

Suggested Citation

  • Christine Dauth, 2020. "Regional Discontinuities and the Effectiveness of Further Training Subsidies for Low-Skilled Employees," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1147-1184, October.
    • Handle: RePEc:sae:ilrrev:v:73:y:2020:i:5:p:1147-1184
    DOI: 10.1177/0019793919885109
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    References listed on IDEAS

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    Cited by:

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    2. Abay, Kibrom A. & Alzua, Maria Laura & Barasa, Laura & Machio, Phyllis Mumia & Tabe-Ojong, Martin Paul Jr., 2024. "Soft-skills training, locus of control, and labor market outcomes of youth: Evidence from a randomized intervention in Kenya," IFPRI discussion papers 2294, International Food Policy Research Institute (IFPRI).
    3. Lawrence M. Kahn, 2020. "Editorial Essay: Introduction to a Special Collection on European Labor Markets in Flux: The German Experience," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1040-1045, October.
    4. Navid Khan & Ke Xing & Salman Mahmood, 2025. "Economic Growth through Determinants of Technical and Vocational Education and Training in Pakistan: Mediating Role of Human Resource Development," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 7061-7084, June.
    5. Backhaus, Teresa, 2025. "Training in late careers — A structural approach," Labour Economics, Elsevier, vol. 93(C).
    6. Riepl, Franziska, 2025. "Human Capital and Motherhood: The Extent and Implications of Child Penalties in Training," VfS Annual Conference 2025 (Cologne): Revival of Industrial Policy 325436, Verein für Socialpolitik / German Economic Association.
    7. Sergey Mazol & Aleh Mazol, 2025. "Investment Approach to Active Labour Market Policy: How It Works for Employers and Employees," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 29-48.
    8. Mazol, Sergey & Mazol, Aleh, . "Inwestycyjne podejście do aktywnej polityki rynku pracy – jak wpływa na pracodawców i pracowników," Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2025(2).

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