Active labour market policies in Germany: do regional labour markets benefit?

Abstract

Active labour-market policy (ALMP) not only affects the labour-market success of participants. Due to indirect effects, they might also affect the job perspectives of non-participants. Hence, even if ALMP programmes have a positive effect for the participants, this does not mean that ALMP improves the labour-market situation as a whole. Therefore, this paper deals with the question whether ALMP improves the matching-process between job-seekers and vacancies and thus increases the total number of outflows from unemployment into employment at the regional level. To answer this question, we use data for local employment offices of the German Federal Employment Agency for the time period 2006 to 2010 and focus on job-seekers subject to unemployment insurance. As microeconometric evaluation studies show, the search effectiveness of programme participants is low during participation due to the lock-in effect, but ideally increases at the end of the programme. In contrast to previous studies on aggregate effects of ALMP, we take this into account and explicitly differentiate current and former programme participants. The result from our augmented matching function shows that the lock-in effect is also present on the regional level. However, a higher search effectiveness after completion of the programme is not outweighed by potential indirect effects on non-participants. A higher share of former programme participants among the job-seekers in a region leads to an increase of the regional matches. This findings show that the application of ALMP improves the regional matching process. However, this effect varies largely between different types of programmes. Positive effects occur for long-term vocational training and wage subsidies as well as for infirm training measures. Further, our results show that the effect of the different programme types depends to some extent on the regional labour-market situation. Zusammenfassung Aktive Arbeitsmarktpolitik (AAMP) beeinflusst nicht nur den Arbeitsmarkterfolg der Teilnehmer, sondern kann durch indirekte Effekte auch den Arbeitsmarkterfolg von Nichtteilnehmern beeinflussen. Auch wenn AAMP eine positive Wirkung auf die Teilnehmer hat, kann somit nicht geschlussfolgert werden, dass der Einsatz von AAMP mit einer allgemeinen Verbesserung der Arbeitsmarktsituation einhergeht. Diese Arbeit beschäftigt sich daher mit der Frage, ob es durch den Einsatz von AAMP gelingt, den Matching-Prozess zwischen Arbeitsuchenden und offenen Stellen zu verbessern und somit die Gesamtzahl der Übergänge aus Arbeitsuche in Beschäftigung zu erhöhen. Untersucht wird dies auf Ebene der Agenturen für Arbeit für den Zeitraum 2006 bis 2010 für Arbeitsuchende (Arbeitslose und Maßnahmeteilnehmer) im Rechtskreis Sozialgesetzbuch III (SGB III). Aus mikroökonomischen Evaluationsstudien ist bekannt, dass die Sucheffektivität der Teilnehmer während der Maßnahme aufgrund des Einbindungseffekts niedrig ist, gegen Ende der Maßnahme aber ansteigt. Im Gegensatz zu bisherigen Studien berücksichtigen wir dies in unseren Ana...

Evaluating Labour Market Policy

“…ALMP improves the regional matching process when using an approach which differentiates the programme participants between those currently participating and former programme participants to account for differences in their search effectiveness ("lock-in effect"). Wapler et al (2014) find for Germany that a higher share of former programme participants leads to an increase of the regional matches. However, this effect varies largely between different types of programmes.…”

Urban Resilience and Social Security Uptake: New Zealand Evidence from the Global Financial Crisis and the COVID-19 Pandemic

“…Resilience to exogenous shocks might also be built through active labour market policies (ALMP), which have been shown to be effective in reducing structural unemployment (Miyamoto & Suphaphiphat, 2021;Sahnoun & Abdennadher, 2018;Vooren et al, 2019). This is particularly true at the regional level where tailored ALMP and other place-sensitive policies have enjoyed some success (Wapler et al, 2018).…”

Make IT Work: The Labor Market Effects of Information Technology Retraining in the Netherlands

“…In addition, the participants in Make IT Work are highly educated, lending support to the contention of Heckman et al (1999) that ALMPs are usually ineffectual, because they target 'less able' individuals. Indeed, most programs evaluated in the literature focus on poorly educated workers (Cavaco et al, 2013;Kruppe & Lang, 2018;Wapler et al, 2018;Wunsch & Lechner, 2008). The participants of the Make IT Work program must have at least a bachelor's degree to be admitted.…”

“…In the German program, the participants eventually acquired a formal vocational degree. Wapler et al (2018) look at the effects of AMLP on regional German labor markets, taking into account general equilibrium effects. Wunsch and Lechner (2008) study the long-term effects of training programs in Germany.…”