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Wage subsidies and public transfers for the unemployed as a means for increasing employment have been intensively discussed in Germany. The paper explains which models have already been applied. In addition, it describes some recent reform proposals and analyzes what economic policy might be capable of doing. It is concluded that new models of wage subsidization are not actually necessary because there is a comprehensive model called “unemployment benefit II”. Instead, the reduction of the rate of contributions to the unemployment insurance system should be considered as a useful policy option.
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