Subsidized work before and after the German Hartz reforms: design of major schemes, evaluation results and lessons learnt

Abstract

This review discusses empirical studies on hiring subsidies in the private sector and on schemes directly providing usually public or non-profit sector jobs for the unemployed in Germany. An important effect of hiring subsidies is that they stabilise employment. For employment schemes, results before the Hartz reforms imply mostly negative average treatment effects on regular employment outcomes of the treated, while results are mostly positive after introducing the reforms. During the years 2003 to 2005, the benefit system was radically reformed and now emphasizes mutual obligations. That might be one reason for changes in the effectiveness of job creation schemes.

The labor market for older workers in Germany

“…These ex-post evaluations studies treat unemployment benefit reforms as "natural experiments", the results of which are specific to these particular reforms and cannot be generalized to the more recent reforms under consideration here. There are also a number of evaluation studies on the employment and wage effects of recent labor market programs for Germany which are not particularly targeted at older people, although they may have had disproportionate effects on them (for summaries see, e. g., Fitzenberger 2009;Steiner 2009;Wolff and Stephan 2013). On recent labor market reforms disproportionally affecting older workers, see Ammermüller et al (2006), Steiner and Schmitz (2007), Dlugosz et al (2014); on pension reform, see, e. g., Börsch-Supan and Berkel (2004) and Hanel (2012).…”

Nueve años de hartz iv: evaluación de una reforma del bienestar

“…Subsidized labour in short term arrangements (One-Euro-Jobs) seems to have slightly positive effects on women in western Germany, on elder persons and for most participants in the long term (at least two years after the end of the scheme) (Wolff and Hohmeyer 2012), which is better than the foregoing long-term arrangements of subsidized job creation schemes which had been introduced in 1969 and had been blamed for keeping participants away from search activities (Caliendo and Hujer 2006). But this positive labour market outcome is not very strong, as it is partly counterbalanced by creaming effects and false targeting (Wolff and Stephan 2013). The One-Euro-Jobs can also improve the feeling of inclusion, but expectably not that much as regular labour does (Promberger 2008, Gundert at al.…”

“…2011. Training schemes may accelerate returns into employment, but mostly if they are provided by regular private businesses, not by specialized training companies or other third sector employers (Wolff and Stephan 2013). There are almost no substitutional effects on regular labour by One-Euro-Jobs, as they seem mainly to replace older job creation schemes instead, and the local advisory councils to the labour agencies seem to be able to prevent those side effects of substituting regular jobs (Sowa et al 2012).…”

How to fight long-term unemployment: lessons from Germany

“…Overviews of the German evaluation studies on active labour market policies after the Hartz reforms are provided by Jacobi and Kluve (2006), Eichhorst and Zimmermann (2007), Heyer et al (2012) and Wolff and Stephan (2013). The following tools have been positively evaluated with respect to improvements of the reemployment prospects of unemployed people (see Achatz et al 2012, Bernhard and Kruppe 2012, Brussig et al 2011, Knuth et al 2014, Königs 2014: employer subsidies, job placement vouchers (see Winterhager et al 2006), company-related training measures, training vouchers (Doerr et al 2014), and the promotion of start-ups (Caliendo and Künn 2011).…”