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Direct job creation in Germany revisited: Is it effective for welfare recipients and does it matter whether participants receive a wage?

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Listed author(s):
  • Hohmeyer, Katrin

    ()

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Wolff, Joachim

    ()

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

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    Abstract

    "Bringing welfare recipients into jobs is a major goal of German labour market policy since a reform of the year 2005. Direct job creation providing participants with temporary subsidized jobs mainly in the non-profit sector plays an important role for achieving this goal. There are three schemes that differ only with respect to a few features: traditional job creation schemes, One-Euro-Jobs and work opportunities subsidising contributory jobs. We study and compare the effectiveness of these three job creation schemes for welfare recipients starting their participation in these programmes in mid 2005. Looking at three similar schemes enables us to study the implications of different programme features for the effectiveness. One major differ-ence between the schemes is that traditional job creation schemes and work opportunities as contributory jobs provide participants with regular earnings, whereas One-Euro-Job participants only receive their benefit and on top a small allowance to cover costs of working. Hence, participation in One-Euro-Jobs in contrast to the other two programmes should provide higher incentives to search for regular jobs during participation. We estimate participation effects on employment outcomes, earnings and welfare benefit levels with propensity score matching using rich administrative data. We find that the programmes are partly effective in moving welfare recipients to work and reducing their welfare benefit dependency. Moreover, our findings imply that the incentives to search for regular jobs are not much lower for participants in the two schemes offering regular wages than for the alternative One-Euro-Jobs. Next, we find the most beneficial impacts for participants in work opportunities as contributory jobs which is the only scheme that can subsidize commercial jobs." (Author's abstract, IAB-Doku) ((en))

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    Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 201021.

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    Length: 63 pages
    Date of creation: 10 Nov 2010
    Handle: RePEc:iab:iabdpa:201021
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    Keywords: Arbeitslosengeld II-Empfänger; arbeitsmarktpolitische Maßnahme; Arbeitsbeschaffungsmaßnahme; Arbeitsgelegenheit; berufliche Reintegration; Arbeitsmarktchancen; Einkommen; Wirkungsforschung; Transferleistung;

    Find related papers by JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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    Cited by:

    1. Heyer, Gerd & Koch, Susanne & Stephan, Gesine & Wolff, Joachim, 2012. "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," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 45(1), pages 41-62.
    2. Eichhorst, Werner, 2015. "Low Pay as an Alternative to Public Direct Job Creation? Lessons from the German Case," IZA Policy Papers 99, Institute for the Study of Labor (IZA).

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