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The Employment Effect of Reforming a Public Employment Agency

Author

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  • Andrey Launov

    () (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany; Department of Economics (IRES), Universite catholique de Louvain; CESifo, Center for Economic Studies)

  • Klaus Waelde

    () (Department of Economics, Johannes Gutenberg-Universitaet Mainz; Department of Economics (IRES), Universite catholique de Louvain; CESifo, Center for Economic Studies)

Abstract

By how much does an increase in operating effectiveness of a public employment agency (PEA) and a reduction of unemployment benefits reduce unemployment? Using a recent labour market reform in Germany as background, we find that an enhanced effectiveness of the PEA explains about 20% of the observed post- reform unemployment decline. The role of unemployment benefit reduction ex- plains just about 5% of the observed decline. Due to disincentive effects resulting from the reform, the reform of the PEA could have had an even higher impact on unemployment reduction if there had been less focus on long-term unemployed workers.

Suggested Citation

  • Andrey Launov & Klaus Waelde, 2015. "The Employment Effect of Reforming a Public Employment Agency," Working Papers 1507, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 18 Aug 2015.
  • Handle: RePEc:jgu:wpaper:1507
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    References listed on IDEAS

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    Cited by:

    1. Michael Stops, 2016. "Revisiting German labour market reform effects—a panel data analysis for occupational labour markets," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-43, December.
    2. Carrillo-Tudela, Carlos & Launov, Andrey & Robin, Jean-Marc, 2018. "The Fall in German Unemployment: A Flow Analysis," IZA Discussion Papers 11442, Institute for the Study of Labor (IZA).
    3. Rothe, Thomas & Wälde, Klaus, 2017. "Where did all the unemployed go? : Non-standard work in Germany after the Hartz reforms," IAB Discussion Paper 201718, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Holzner, Christian Ludwig & Watanabe, Makoto, 2015. "Labor Market Equilibrium with Public Employment Agency," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113097, Verein für Socialpolitik / German Economic Association.
    5. Gianna C. Giannelli & Ursula Jaenichen & Thomas Rothe, 2016. "The evolution of job stability and wages after the implementation of the Hartz reforms
      [Die Entwicklung von Beschäftigungsstabilität und Löhnen seit Einführung der Hartz-Reformen]
      ," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(3), pages 269-294, November.
    6. Michael Weber, 2016. "The short-run and long-run effects of decentralizing public employment services," ifo Working Paper Series 209, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Schiprowski, Amelie, 2017. "The Role of Caseworkers in Unemployment Insurance: Evidence from Unplanned Absences," IZA Discussion Papers 11040, Institute for the Study of Labor (IZA).
    8. Gehrke, Britta & Weber, Enzo, 2017. "Identifying asymmetric effects of labor market reforms," IAB Discussion Paper 201723, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Burda Michael C. & Seele Stefanie, 2017. "Das deutsche Arbeitsmarktwunder: Eine Bilanz," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 18(3), pages 179-204, October.

    More about this item

    Keywords

    Employment agencies; unemployment benefits; labour market reform; unemployment; structural model;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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