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Thumbscrews for Agencies or for Individuals? How to Reduce Unemployment

  • Andrey Launov

    ()

    (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany)

  • Klaus Wälde

    ()

    (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany)

To which extent does an increase in operating effectiveness of public employment agencies on the one hand and a reduction of unemployment benefits on the other reduce unemployment? Using the recent labour market reform in Germany as background we find that the role of unemployment benefit reduction for the re- duction of unemployment is very modest (7% of the observed decline). Enhanced effectiveness of public employment agencies, to the contrary, explains a substan- tial part (34%) of the observed post-reform unemployment decline. If disincentive effects of PEA reforms had been avoided, the effect could have increased to 51%.

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File URL: http://www.macro.economics.uni-mainz.de/RePEc/pdf/Discussion_Paper_1307.pdf
File Function: First version, 2013
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Paper provided by Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz in its series Working Papers with number 1307.

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Length: 35 pages
Date of creation: 01 Sep 2013
Date of revision: 01 Sep 2013
Handle: RePEc:jgu:wpaper:1307
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