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The Curse and Blessing of Training the Unemployed in a Changing Economy: The Case of East Germany After Unification

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  • Lechner Michael

    (Swiss Institute for International Economics and Applied Economic Research, Bodanstrasse 8, St.Gallen, Switzerland)

  • Miquel Ruth

    (Swiss Institute for International Economics and Applied Economic Research, Bodanstrasse 8, St.Gallen, Switzerland)

  • Wunsch Conny

    (Swiss Institute for International Economics and Applied Economic Research, Bodanstrasse 8, St.Gallen, Switzerland)

Abstract

We analyse the effects of government-sponsored training for the unemployed conducted during East German transition. For the microeconometric analysis, we use a new, large and informative administrative database that allows us to use matching methods to address potential selection bias, to study different types of programmes and to observe labour market outcomes over eight years. We find strong evidence that, on average, the training programmes under investigation increase long-term employment prospects and earnings. However, as an important exception, the longer training programmes are not helpful for their male participants. At least part of the explanation for this negative result is that caseworkers severely misjudged the structure of the future demand for skills.

Suggested Citation

  • Lechner Michael & Miquel Ruth & Wunsch Conny, 2007. "The Curse and Blessing of Training the Unemployed in a Changing Economy: The Case of East Germany After Unification," German Economic Review, De Gruyter, vol. 8(4), pages 468-509, December.
    • Handle: RePEc:bpj:germec:v:8:y:2007:i:4:p:468-509
    DOI: 10.1111/j.1468-0475.2007.00415.x
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    More about this item

    Keywords

    Active labour market policy; non-parametric identification; matching estimation; causal effects; programme evaluation; panel data; gender differences;
    All these keywords.

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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