IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp3772.html
   My bibliography  Save this paper

Wage Subsidies for Needy Job-Seekers and Their Effect on Individual Labour Market Outcomes after the German Reforms

Author

Listed:
  • Bernhard, Sarah

    (Institute for Employment Research (IAB), Nuremberg)

  • Gartner, Hermann

    (Institute for Employment Research (IAB), Nuremberg)

  • Stephan, Gesine

    (Institute for Employment Research (IAB), Nuremberg)

Abstract

Our paper estimates the average effect of wage subsidies – paid to employers for a limited period of time – on the labour market prospects of needy job-seekers without access to insurance-paid 'unemployment benefit I'. The results show that wage subsidies had large and significant favourable effects: 20 months after taking up a subsidised job, the share of persons in regular employment is nearly 40 percentage points higher across participants. On the whole, groups with particular placement difficulties benefit comparatively more from subsidisation.

Suggested Citation

  • 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," IZA Discussion Papers 3772, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3772
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp3772.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sascha O. Becker & Marco Caliendo, 2007. "Sensitivity analysis for average treatment effects," Stata Journal, StataCorp LP, vol. 7(1), pages 71-83, February.
    2. 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].
    3. Dorsett, Richard, 2006. "The new deal for young people: effect on the labour market status of young men," Labour Economics, Elsevier, vol. 13(3), pages 405-422, June.
    4. Hohmeyer, Katrin & Wolff, Joachim, 2007. "A fistful of Euros: Does One-Euro-Job participation lead means-tested benefit recipients into regular jobs and out of unemployment benefit II receipt?," IAB-Discussion Paper 200732, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Carling, Kenneth & Richardson, Katarina, 2004. "The relative efficiency of labor market programs: Swedish experience from the 1990s," Labour Economics, Elsevier, vol. 11(3), pages 335-354, June.
    6. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 01 Feb 2018.
    7. Konle-Seidl, Regina, 2008. "Changes in the governance of employment services in Germany since 2003," IAB-Discussion Paper 200810, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. 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.
    9. Wolff, Joachim & Jozwiak, Eva, 2007. "Does short-term training activate means-tested unemployment benefit recipients in Germany?," IAB-Discussion Paper 200729, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
    11. Cockx, Bart & Van der Linden, Bruno & Karaa, Adel, 1998. "Active Labour Market Policies and Job Tenure," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 685-708, October.
    12. 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].
    13. Sarah Bernhard & Ursula Jaenichen & Gesine Stephan, 2006. "Eingliederungszuschüsse bei Einarbeitung und erschwerter Vermittlung: Matching-Analysen auf der Basis von Prozessdaten," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 75(3), pages 67-84.
    14. Bernhard, Sarah & Wolff, Joachim, 2008. "Contracting out placement services in Germany : is assignment to private providers effective for needy job-seekers?," IAB-Discussion Paper 200805, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Bach, Hans-Uwe & Gartner, Hermann & Klinger, Sabine & Rothe, Thomas & Spitznagel, Eugen, 2008. "Arbeitsmarkt 2008: Der Aufschwung lässt nach," IAB-Kurzbericht 200803, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    16. Forslund, Anders & Johansson, Per & Lindqvist, Linus, 2004. "Employment subsidies - A fast lane from unemployment to work?," Working Paper Series 2004:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    17. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Leibniz Centre for European Economic Research.
    18. Heinemann, Sarah & Gartner, Hermann & Jozwiak, Eva, 2006. "Arbeitsförderung für Langzeitarbeitslose : erste Befunde zu Eingliederungsleistungen des SGB III im Rechtskreis SGB II," IAB-Forschungsbericht 200603, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    19. 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.
    20. 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.
    21. Fredriksson, Peter & Johansson, Per, 2004. "Dynamic Treatment Assignment – The Consequences for Evaluations Using Observational Data," IZA Discussion Papers 1062, Institute of Labor Economics (IZA).
    22. Rüb, Felix & Werner, Daniel, 2007. "Typisierung von SGB II Trägern," IAB-Forschungsbericht 200701, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    23. Wolff, Joachim & Nivorozhkin, Anton, 2008. "Start me up: The effectiveness of a self-employment programme for needy unemployed people in Germany," IAB-Discussion Paper 200820, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    24. Sianesi, Barbara, 2008. "Differential effects of active labour market programs for the unemployed," Labour Economics, Elsevier, vol. 15(3), pages 370-399, June.
    25. Hummel, Elisabeth & Jacobebbinghaus, Peter & Kohlmann, Annette & Oertel, Martina & Wübbeke, Christina & Ziegerer, Manfred, 2005. "Stichprobe der Integrierten Erwerbsbiografien : IEBS 1.0, Handbuch-Version 1.0.0 (Integrated Employment Biographies Sample IEBS 1.0)," FDZ Datenreport. Documentation on Labour Market Data 200506_de, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    26. Neumark, David, 2008. "Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Raising Productivity," IZA Discussion Papers 3355, Institute of Labor Economics (IZA).
    27. Barbara Sianesi, 2002. "An evaluation of the Swedish system of active labour market programmes in the 1990s," IFS Working Papers W02/01, Institute for Fiscal Studies.
    28. Bernhard, Sarah & Jaenichen, Ursula & Stephan, Gesine, 2007. "Eingliederungszuschüsse: Die Geförderten profitieren," IAB-Kurzbericht 200709, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stephan, Gesine & Pahnke, André, 2008. "The Relative Effectiveness of Selected Active Labour Market Programmes and the Common Support Problem," IZA Discussion Papers 3767, Institute of Labor Economics (IZA).
    2. 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].
    3. 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.
    4. 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.
    5. Gerd Heyer & Susanne Koch & Gesine Stephan & Joachim Wolff, 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 ref," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 45(1), pages 41-62, March.
    6. Caliendo, Marco, 2009. "Income Support Systems, Labor Market Policies and Labor Supply: The German Experience," IZA Discussion Papers 4665, Institute of Labor Economics (IZA).
    7. Sarah Bernhard & Thomas Kruppe, 2012. "Effectiveness of Further Vocational Training in Germany – Empirical Findings for Persons Receiving Means-tested Unemployment Benefits," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(4), pages 501-526.
    8. 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].
    9. Marco Caliendo & Jens Hogenacker, 2012. "The German labor market after the Great Recession: successful reforms and future challenges," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-24, December.
    10. Marco Caliendo & Ricarda Schmidl, 2016. "Youth unemployment and active labor market policies in Europe," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-30, December.
    11. 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].
    12. 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.
    13. Rainer Eppel & Helmut Mahringer, 2012. "Do wage subsidies work in boosting economic inclusion? Evidence on e," EcoMod2012 4065, EcoMod.
    14. 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].
    15. Alessio Brown & Johannes Koettl, 2015. "Active labor market programs - employment gain or fiscal drain?," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-36, December.
    16. Emil Mihaylov, 2011. "Evaluation of Subsidized Employment Programs for Long-Term Unemployed in Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 136-167.
    17. Lechner, Michael & Wunsch, Conny & Huber, Martin & Walter, Thomas, 2009. "Do German Welfare-to-Work Programmes Reduce Welfare and Increase Work?," CEPR Discussion Papers 7238, C.E.P.R. Discussion Papers.
    18. Caliendo, Marco & Mahlstedt, Robert & Mitnik, Oscar A., 2017. "Unobservable, but unimportant? The relevance of usually unobserved variables for the evaluation of labor market policies," Labour Economics, Elsevier, vol. 46(C), pages 14-25.
    19. 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.
    20. Wolff, Joachim & Nivorozhkin, Anton, 2008. "Start me up: The effectiveness of a self-employment programme for needy unemployed people in Germany," IAB-Discussion Paper 200820, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    Keywords

    wage subsidies; unemployment benefits II for needy job-seekers; evaluation of active labour market programmes; propensity score matching;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp3772. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.