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Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany

Author

Listed:
  • Jacobi, Lena

    (RWI)

  • Kluve, Jochen

    (KfW Development Bank)

Abstract

Having faced high unemployment rates for more than a decade, the German government implemented a comprehensive set of labour market reforms during the period 2003-2005. This paper describes the economic and institutional context of the German labour market before and after these so-called Hartz reforms. Focussing on active policy measures, we delineate the rationale for reform and its main principles. As results of programme evaluation studies post-reform have become available just now, we give a first assessment of the effectiveness of key elements of German ALMP before and after the Hartz reforms. The evidence indicates that the re-organisation of public employment services was mainly successful, with the exception of the outsourcing of services. Re-designing training programmes seems to have improved their effectiveness, while job creation schemes continue to be detrimental for participants' employment prospects. Wage subsidies and start-up subsidies show significantly positive effects. On balance, therefore, the reform seems to be moving the German labour market in the right direction.

Suggested Citation

  • Jacobi, Lena & Kluve, Jochen, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," IZA Discussion Papers 2100, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2100
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    References listed on IDEAS

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    Keywords

    programme evaluation; Active Labour Market Policy; labour market reform;
    All these keywords.

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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