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Macroeconometric Evaluation of Active Labour Market Policies in Germany – A Dynamic Panel Approach Using Regional Data

  • Hujer, Reinhard


    (Goethe University Frankfurt)

  • Blien, Uwe


    (Institute for Employment Research (IAB), Nuremberg)

  • Caliendo, Marco


    (University of Potsdam)

  • Zeiss, Christopher


    (Goethe University Frankfurt)

Most evaluation studies of active labour market policies (ALMP) focus on the microeconometric evaluation approach using individual data. However, as the microeconometric approach usually ignores impacts on the non-participants, it should be seen as a first step to a complete evaluation which has to be followed by an analysis on the macroeconomic level. As a starting point for our analysis we discuss the effects of ALMP in a theoretical labour market framework augmented by ALMP. We estimate the impacts of ALMP in Germany for the time period 1999-2001 with regional data of 175 labour office districts. Due to the high persistence of German labour market data the application of a dynamic model is crucial. Furthermore our analysis accounts especially for the inherent simultaneity problem of ALMP. For West Germany we find positive effects of vocational training and job creation schemes on the labour market situation, whereas the results for East Germany do not allow profound statements.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 616.

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Length: 45 pages
Date of creation: Oct 2002
Date of revision:
Publication status: published in: Carloeo, F.E. and Destefanis, S. (eds.): The European Labour Market - Regional Dimensions, Physica Verlag, 2006, 287-310
Handle: RePEc:iza:izadps:dp616
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  1. Calmfors, Lars, 1993. "Lessons from the macroeconomic experience of Sweden," European Journal of Political Economy, Elsevier, vol. 9(1), pages 25-72, March.
  2. Hujer, Reinhard & Fitzenberger, Bernd, 2002. "Stand und Perspektiven der Evaluation der aktiven Arbeitsmarktpolitik in Deutschland," ZEW Discussion Papers 02-13, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Lars Calmfors & Anders Forslund & Maria Hemström, 2002. "Does Active Labour Market Policy Work? Lessons from the Swedish Experiences," CESifo Working Paper Series 675, CESifo Group Munich.
  4. Hujer, Reinhard & Wellner, Marc, 2000. "The Effects of Public Sector Sponsored Training on Individual Employment Performance in East Germany," IZA Discussion Papers 141, Institute for the Study of Labor (IZA).
  5. T. Boeri & M. C. Burda, 1995. "Active Labor Market Policies, Job Matching and the Czech Miracle," SFB 373 Discussion Papers 1995,76, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  6. Richard Blundell & Steve Bond & Frank Windmeijer, 2000. "Estimation in dynamic panel data models: improving on the performance of the standard GMM estimator," IFS Working Papers W00/12, Institute for Fiscal Studies.
  7. Calmfors, Lars & Skedinger, Per, 1995. "Does Active Labor Market Policy Increase Employment? Theoretical Considerations and Some Empirical Evidence from Sweden," Working Paper Series 429, Research Institute of Industrial Economics.
  8. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
  9. Ahn, Seung C. & Schmidt, Peter, 1995. "Efficient estimation of models for dynamic panel data," Journal of Econometrics, Elsevier, vol. 68(1), pages 5-27, July.
  10. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "General Equilibrium Treatment Effects: A Study of Tuition Policy," NBER Working Papers 6426, National Bureau of Economic Research, Inc.
  11. Johnson, G.E. & Layard, P.R.G., 1987. "The natural rate of unemployment: Explanation and policy," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 16, pages 921-999 Elsevier.
  12. Carl Davidson & Stephen A. Woodbury, 1990. "The Displacement Effect of Reemployment Bonus Programs," Upjohn Working Papers and Journal Articles 90-02, W.E. Upjohn Institute for Employment Research.
  13. Jeffrey Smith, 2000. "A Critical Survey of Empirical Methods for Evaluating Active Labor Market Policies," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(III), pages 247-268, September.
  14. Hujer, Reinhard & Caliendo, Marco, 2000. "Evaluation of Active Labour Market Policy: Methodological Concepts and Empirical Estimates," IZA Discussion Papers 236, Institute for the Study of Labor (IZA).
  15. Anders Forslund & Alan Krueger, 1994. "An Evaluation of the Swedish Active Labor Market Policy: New and Received Wisdom," Working Papers 711, Princeton University, Department of Economics, Industrial Relations Section..
  16. Pannenberg, Markus & Schwarze, Johannes, 1998. "Labor market slack and the wage curve," Economics Letters, Elsevier, vol. 58(3), pages 351-354, March.
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  18. Fertig, Michael & Schmidt, Christoph M., 2000. "Discretionary Measures of Active Labor Market Policy: The German Employment Promotion Reform in Perspective," IZA Discussion Papers 182, Institute for the Study of Labor (IZA).
  19. James J. Heckman, 1999. "Accounting for Heterogeneity, Diversity, and General Equilibriumin Evaluating Social Programs," NBER Working Papers 7230, National Bureau of Economic Research, Inc.
  20. Martin Neil Baily & James Tobin, 1977. "Macroeconomic Effects of Selective Public Employment and Wage Subsidies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 8(2), pages 511-544.
  21. Richard Jackman & Christopher A. Pissarides & S Savouri, 1990. "Labour Market Policies and Unemployment in the OECD," CEP Discussion Papers dp0011, Centre for Economic Performance, LSE.
  22. Stephen Bond & Frank Windmeijer, 2002. "Finite Sample Inference for GMM Estimators in Linear Panel Data Models," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 C6-3, International Conferences on Panel Data.
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  24. repec:oup:restud:v:58:y:1991:i:2:p:277-97 is not listed on IDEAS
  25. Calmfors, Lars & Forslund, Anders, 1991. "Real-Wage Determination and Labour Market Policies: The Swedish Experience," Economic Journal, Royal Economic Society, vol. 101(408), pages 1130-48, September.
  26. Robert G. Fay, 1996. "Enhancing the Effectiveness of Active Labour Market Policies: Evidence from Programme Evaluations in OECD Countries," OECD Labour Market and Social Policy Occasional Papers 18, OECD Publishing.
  27. Layard, Richard & Nickell, Stephen, 1986. "Unemployment in Britain," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S121-69, Supplemen.
  28. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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