First step and last resort: One-Euro-Jobs after the reform

Abstract

Job creation programmes aim at increasing the employability of hard-to-place unemployed, and eventually integrating them into employment. Yet, previous evaluation studies have been pessimistic about their efficacy. For One-Euro-Jobs, a job creation programme for welfare benefit recipients in Germany, previous evaluations found unfavourable effects particularly for easier-to-place participants. Thus, in 2012 the legislator reformed the programme in order to target the hard-to-place more accurately. This study is the first post-reform evaluation of One-Euro-Jobs. We find that, although the programme is indeed better targeted than before, One-Euro-Jobs decrease participants’ employment chances within three years after programme entry. These outcomes are worse than those found for pre-reform participants. We cannot conclude with certainty whether the reform decreased the programme’s efficacy, but we identify channels through which the reform and other contemporaneous changes may have done so. These channels include changes in programme design features, changes in business-cycle conditions, and prolonged lock-in effects due to “programme careers”. To substantiate the latter explanation, we also provide novel evidence that One-Euro-Jobs seem to initiate programme careers.

Active Labour Market Policies for the Long-Term Unemployed: New Evidence from Causal Machine Learning

“…These considerations are in line with findings on the German workfare programme called One-Euro Jobs, which were more effective in sectors with high labour demand (Harrer and Stockinger (2021)). Especially, private placement services might have better contact to firms in specific sectors.…”

Diversity of employment biographies and prospects of middle-aged welfare recipients

“…Workfare jobs are often located in sectors with low labour demand, which can limit the utility of work experience gained there (Harrer and Stockinger, 2021). Nonetheless, workfare might provide a first step into the labour market, for instance by providing an opportunity to become accustomed to a regular work schedule, and may therefore have positive effects on subsequent regular employment for people with low employment experience.…”

“…Previous research has found active labour market programmes such as short training, further vocational training and workfare to vary in their ability to improve employment opportunities, with the greatest positive effects for further vocational training and lowest effects for workfare (Bernhard, 2016;Harrer et al, 2020;Harrer and Stockinger, 2021). Dengler (2019) finds that positive job quality effects are particularly evident for further vocational training.…”

What Role for Activation in Eco-Social Policy?

“…Access is limited to those with least employment prospects. Welfare recipients are sanctioned if they refuse a One Euro Job offer, while work is limited to part-time work so that participants can spend the remainder of their working week on job search requirements (Hohmeyer and Wolff, 2010; Harrer and Stockinger, 2021).…”