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The effectiveness of targeted wage subsidies for hard-to-place workers

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  • Ursula Jaenichen
  • Gesine Stephan

Abstract

Targeted wage subsidies paid to employers are an important element of active labour market policies in Germany. This article uses propensity score matching to investigate their effect on the employment and unemployment rates of subsidized hard-to-place workers. In a first scenario, we estimate the average treatment effect of a subsidy on previously unemployed individuals. A second scenario analyses the effects of a subsidy on employment probabilities conditional on taking-up employment. The third scenario investigates the additional effect of a subsidy on individuals, who have participated in a short-term training measure beforehand. Summing up and in line with the literature, the results show that subsidies have a favourable effect on the employment prospects of participants.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:applec:v:43:y:2011:i:10:p:1209-1225
    DOI: 10.1080/00036840802600426
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    References listed on IDEAS

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    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    2. 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).
    3. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers 37, RWI - Leibniz-Institut für Wirtschaftsforschung.
    4. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," IZA Discussion Papers 2018, Institute for the Study of Labor (IZA).
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    Citations

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    Cited by:

    1. Brück-Klingberg, Andrea & Burkert, Carola & Garloff, Alfred & Seibert, Holger & Wapler, Rüdiger, 2011. "Does higher education help immigrants find a job? : A survival analysis," IAB Discussion Paper 201106, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Stijn Baert, 2016. "Wage subsidies and hiring chances for the disabled: some causal evidence," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 71-86, January.
    3. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2011. "What Can Active Labour Market Policies Do?," Papers EC1, Economic and Social Research Institute (ESRI).
    4. Bräuninger, Michael & Michaelis, Jochen & Sode, Madlen, 2013. "10 Jahre Hartz-Reformen," HWWI Policy Papers 73, Hamburg Institute of International Economics (HWWI).
      • Michael Bräuninger & Jochen Michaelis & Madlen Sode, 2013. "10 Jahre Hartz-Reformen," MAGKS Papers on Economics 201318, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Bernhard, Sarah & Gartner, Hermann & Stephan, Gesine, 2008. "Wage subsidies for needy job-seekers and their effect on individual labour market outcomes after the German reforms," IAB Discussion Paper 200821, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. 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 refor," IAB Discussion Paper 201117, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Dengler, Katharina & Hohmeyer, Katrin, 2010. "Maßnahmesequenzen im SGB II : eine deskriptive Analyse (Measure sequences in Book II of the Social Code)," IAB-Forschungsbericht 201008, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Benjamin Schünemann & Michael Lechner & Conny Wunsch, 2015. "Do Long-Term Unemployed Workers Benefit from Targeted Wage Subsidies?," German Economic Review, Verein für Socialpolitik, vol. 16(1), pages 43-64, February.
    9. Stephan Gesine, 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), De Gruyter, vol. 228(5-6), pages 586-611, October.
    10. 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].
    11. 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].
    12. 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).
    13. Joachim Wolff & Gesine Stephan, 2013. "Subsidized work before and after the German Hartz reforms: design of major schemes, evaluation results and lessons learnt," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-24, December.
    14. Marco Caliendo & Robert Mahlstedt & Oscar A. Mitnik, 2014. "Unobservable, but Unimportant?: The Influence of Personality Traits (and Other Usually Unobserved Variables) for the Evaluation of Labor Market Policies," Discussion Papers of DIW Berlin 1407, DIW Berlin, German Institute for Economic Research.
    15. repec:eee:labeco:v:46:y:2017:i:c:p:14-25 is not listed on IDEAS
    16. Bijie Ren, 2008. "The regional effects of marginal wage subsidies," Psychometrika, Springer;The Psychometric Society, vol. 3(4), pages 598-626, December.
    17. Caliendo, Marco & Mahlstedt, Robert & Mitnik, Oscar, 2014. "Unobservable, but Unimportant? The Influence of Personality Traits (and Other Usually Unobserved Variables) for the Estimation of Treatment Effects," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100502, Verein für Socialpolitik / German Economic Association.
    18. Gerd Heyer & Susanne Koch & Gesine Stephan & Joachim Wolff, 2012. "Evaluation der aktiven Arbeitsmarktpolitik: Ein Sachstandsbericht für die Instrumentenreform 2011," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 45(1), pages 41-62, March.

    More about this item

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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