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Low Pay as an Alternative to Public Direct Job Creation? Lessons from the German Case

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  • Eichhorst, Werner

    (IZA)

Abstract

This contribution draws some conclusions from the experience of attempts by the German government at integrating the most vulnerable groups into the labor market, in particular the long-term unemployed and the low skilled. There has been a sort of paradigm shift that goes beyond active labor market policies and public direct job creation in favor of allowing for a more flexible labor market to emerge, thus implying a growing low-pay sector. This policy reversal can be seen as a partial success as those that were formerly excluded now have a somewhat better access to the labor market. However, this improved access comes with some limitations in terms of the quality of jobs and with respect to the upward mobility of those who enter the labor market at low-pay levels.

Suggested Citation

  • Eichhorst, Werner, 2015. "Low Pay as an Alternative to Public Direct Job Creation? Lessons from the German Case," IZA Policy Papers 99, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izapps:pp99
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    2. Marco Caliendo & Reinhard Hujer & Stephan Thomsen, 2008. "Identifying effect heterogeneity to improve the efficiency of job creation schemes in Germany," Applied Economics, Taylor & Francis Journals, vol. 40(9), pages 1101-1122.
    3. Hohmeyer, Katrin & Wolff, Joachim, 2010. "Direct job creation in Germany revisited: Is it effective for welfare recipients and does it matter whether participants receive a wage?," IAB-Discussion Paper 201021, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. W. Eichhorst & M. Grienberger-Zingerle & R. Konle-Seidl, 2008. "Activation Policies in Germany: From Status Protection to Basic Income Support," Springer Books, in: Werner Eichhorst & Otto Kaufmann & Regina Konle-Seidl (ed.), Bringing the Jobless into Work?, pages 17-67, Springer.
    5. Caliendo, Marco & Hujer, Reinhard & Thomsen, Stephan L., 2004. "Evaluation der Eingliederungseffekte von Arbeitsbeschaffungsmaßnahmen in reguläre Beschäftigung für Teilnehmer in Deutschland," ZEW Discussion Papers 04-46, ZEW - Leibniz Centre for European Economic Research.
    6. Maarten Goos & Alan Manning & Anna Salomons, 2014. "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review, American Economic Association, vol. 104(8), pages 2509-2526, August.
    7. Werner Eichhorst & Otto Kaufmann & Regina Konle-Seidl (ed.), 2008. "Bringing the Jobless into Work?," Springer Books, Springer, number 978-3-540-77435-8, June.
    8. Kim, Yong-seong, 2015. "Future Direction of Job Creation Programs in Korea," KDI Policy Forum 261, Korea Development Institute (KDI).
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    Cited by:

    1. FitzRoy, Felix & Jin, Jim, 2017. "Basic Income and a Public Job Offer: Complementary Policies to Reduce Poverty and Unemployment," IZA Policy Papers 133, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Germany; evaluation; subsidized employment; low pay; direct job creation;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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