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Give them a break! Did activation of young welfare recipients overshoot in Germany? (A regression discontinuity analysis)

  • Wolff, Joachim
  • Nivorozhkin, Anton
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    In Germany, due to special rules 15- to 24-year-old welfare recipients, registered with Public Employment Office, are highly targeted by mandatory activation policies. This paper investigates the effects of the special rules in terms of enhancing the (re-)employment probability, increasing earnings and reducing benefit dependency of targeted people in East and West Germany in the short- and the long-run. Using registry dataset of the inflow into unemployment and welfare over the period October 2005 to January 2006 the paper exploits the age related eligibility rule to identify a suitable counterfactual using a regression discontinuity design. Our estimates imply zero or negative effects of targeting for selected population subgroups. A possible explanation to our finding is that an excessive targeting of young welfare recipients by active labour market programmes may lead to a low quality matches between programmes and participants.

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    File URL: http://econstor.eu/bitstream/10419/62046/1/VfS_2012_pid_905.pdf
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    Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century with number 62046.

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    Date of creation: 2012
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    Handle: RePEc:zbw:vfsc12:62046
    Contact details of provider: Web page: http://www.socialpolitik.org/
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    1. David Card & Jochen Kluve & Andrea Weber, 2009. "Active Labor Market Policy Evaluations: A Meta-analysis," CESifo Working Paper Series 2570, CESifo Group Munich.
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    5. Kluve, Jochen, 2010. "The effectiveness of European active labor market programs," Labour Economics, Elsevier, vol. 17(6), pages 904-918, December.
    6. Crépon, Bruno & Duflo, Esther & Gurgand, Marc & Rathelot, Roland & Zamora, Philippe, 2012. "Do Labor Market Policies Have Displacement Effects? Evidence from a Clustered Randomized Experiment," CEPR Discussion Papers 9251, C.E.P.R. Discussion Papers.
    7. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs In Economics," Working Papers 1118, Princeton University, Department of Economics, Industrial Relations Section..
    8. Caliendo, Marco & Künn, Steffen & Schmidl, Ricarda, 2011. "Fighting Youth Unemployment: The Effects of Active Labor Market Policies," IZA Discussion Papers 6222, Institute for the Study of Labor (IZA).
    9. Jensen, Peter & Rosholm, Michael & Svarer, Michael, 2003. "The response of youth unemployment to benefits, incentives, and sanctions," European Journal of Political Economy, Elsevier, vol. 19(2), pages 301-316, June.
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    15. Inés Hardoy, 2005. "Impact of Multiple Labour Market Programmes on Multiple Outcomes: The Case of Norwegian Youth Programmes ," LABOUR, CEIS, vol. 19(3), pages 425-467, 09.
    16. Carling, Kenneth & Larsson, Laura, 2005. "Does early intervention help the unemployed youth?," Labour Economics, Elsevier, vol. 12(3), pages 301-319, June.
    17. repec:rwi:repape:0249 is not listed on IDEAS
    18. Pissarides, Christopher A, 1992. "Loss of Skill during Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1371-91, November.
    19. Thomas A. Mroz & Timothy H. Savage, 2006. "The Long-Term Effects of Youth Unemployment," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
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