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Labour Market Policy in Germany: Institutions, Instruments and Reforms since Unification

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  • Conny Wunsch

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Abstract

Almost 15 years after Unification in 1990, Germany is still struggling with the economic consequences of this event. Although the East German economy has made considerable progress since its near-collapse after the German monetary, economic and social union in July 1990, the East German labour market has not yet recovered. Western Germany, which had to bear a substantial part of the fiscal cost of German Unification, is also faced with high unemployment though the rate is considerably lower than in the Eastern part. Expenditure for activation measures and income support during unemployment is substantial and one of the highest among OECD countries. In response to exploding cost of unemployment and continuing public pressure to solve the unemployment problem, the German Federal Government has started the largest social policy reform in the history of the Federal Republic. This paper reconstructs the development of the German labour market and the stepwise reform of German labour market policy since German Unification in 1990. It provides a detailed description of the instruments of German active labour market policy and reviews the existing econometric evidence on their effectiveness.

Suggested Citation

  • Conny Wunsch, 2005. "Labour Market Policy in Germany: Institutions, Instruments and Reforms since Unification," University of St. Gallen Department of Economics working paper series 2005 2005-06, Department of Economics, University of St. Gallen.
    • Handle: RePEc:usg:dp2005:2005-06
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    References listed on IDEAS

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    9. Reinhard Hujer & Stephan Thomsen & Christopher Zeiss, 2006. "The effects of vocational training programmes on the duration of unemployment in Eastern Germany," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 90(2), pages 299-321, June.
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    Citations

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    Cited by:

    1. Lechner, Michael & Wunsch, Conny, 2006. "Active Labour Market Policy in East Germany: Waiting for the Economy to Take Off," CEPR Discussion Papers 5924, C.E.P.R. Discussion Papers.
    2. Michael Lechner & Ruth Miquel & Conny Wunsch, 2007. "The Curse and Blessing of Training the Unemployed in a Changing Economy: The Case of East Germany After Unification," German Economic Review, Verein für Socialpolitik, vol. 8, pages 468-509, November.
    3. Michael Lechner & Conny Wunsch, 2009. "Active labour market policy in East Germany," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(4), pages 661-702, October.
    4. Stefanie Behncke & Markus Frölich & Michael Lechner, 2008. "A Caseworker Like Me - Does The Similarity Between Unemployed And Caseworker Increase Job Placements?," University of St. Gallen Department of Economics working paper series 2008 2008-08, Department of Economics, University of St. Gallen.
    5. Stefanie Behncke & Markus Frˆlich & Michael Lechner, 2010. "Unemployed and their caseworkers: should they be friends or foes?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 173(1), pages 67-92.
    6. 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.
    7. Iryna Kyzyma, 2014. "Changes in the Patterns of Poverty Duration in Germany, 1992–2009," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S2), pages 305-331, November.
    8. Jun Nie, 2010. "Training or search? evidence and an equilibrium model," Research Working Paper RWP 10-03, Federal Reserve Bank of Kansas City.
    9. Kluve, Jochen & Schneider, Hilmar & Uhlendorff, Arne & Zhao, Zhong, 2012. "Evaluating continuous training programmes by using the generalized propensity score," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 587-617.
    10. Fitzenberger, Bernd & Volter, Robert, 2007. "Long-run effects of training programs for the unemployed in East Germany," Labour Economics, Elsevier, vol. 14(4), pages 730-755, August.
    11. Bergemann, Annette & Pohlan, Laura & Uhlendorff, Arne, 2016. "Job Creation Schemes in Turbulent Times," IZA Discussion Papers 10369, Institute for the Study of Labor (IZA).
    12. KYZYMA Iryna, 2013. "Changes in the patterns of poverty duration in Germany, 1992-2009," LISER Working Paper Series 2013-06, LISER.
    13. Michael Lechner & Conny Wunsch, 2009. "Are Training Programs More Effective When Unemployment Is High?," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 653-692, October.
    14. Reinhard Hujer & Stephan Thomsen & Christopher Zeiss, 2006. "The effects of vocational training programmes on the duration of unemployment in Eastern Germany," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 90(2), pages 299-321, June.
    15. Michael Lechner & Blaise Melly, 2007. "Earnings Effects of Training Programs," University of St. Gallen Department of Economics working paper series 2007 2007-28, Department of Economics, University of St. Gallen.
    16. Juan Carlos Martinez Oliva, 2009. "Riunificazione intertedesca e politiche per la convergenza," Mo.Fi.R. Working Papers 14, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    17. Jochen Kluve & Lena Jacobi, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," RWI Discussion Papers 0041, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    18. Jacobi, Lena & Kluve, Jochen, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," IZA Discussion Papers 2100, Institute for the Study of Labor (IZA).
    19. repec:iab:iabzaf:v:39:i:3/4:p:347-364 is not listed on IDEAS
    20. Yankova, Katerina, 2010. "Der Selektionsprozess in Maßnahmen der aktiven Arbeitsmarktpolitik : eine explorative Untersuchung für die deutsche Arbeitsvermittlung (The selection process in active labour market policy measures : ," IAB Discussion Paper 201011, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    21. repec:iab:iabzaf:v:39:i:3/4:p:365-390 is not listed on IDEAS
    22. repec:iab:iabzaf:v:40:i:1:p:45-64 is not listed on IDEAS
    23. Martin Huber & Michael Lechner & Conny Wunsch & Thomas Walter, 2011. "Do German Welfare‐to‐Work Programmes Reduce Welfare Dependency and Increase Employment?," German Economic Review, Verein für Socialpolitik, vol. 12(2), pages 182-204, May.
    24. repec:zbw:rwidps:0041 is not listed on IDEAS

    More about this item

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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