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Assessing the impact of training on employment: The case of East Germany

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  • Fitzenberger, Bernd
  • Prey, Hedwig

Abstract

This paper is concerned with the effects of training on the future employment probability of trainees. During the transformation process of the East German economy after reunification, employment decreased by a large amount. Therefore, many workers in East Germany participated in training programs which were heavily subsidized by the labor administration. However, at this point a thorough evahiation of such labor market programs does not exist. This paper attempts to fill this gap with regard to the impact of participation in training on the future employment probability of the trainees. Our analysis is based on the Arbeitsmarktmonitor Ost, a large labor market panel data set used by the German labor administration to examine the development of the East German labor market. We analyze the effects of two types of training: training within a firm and training in an institution outside of the firm, where the worker is employed. In our empirical analysis, we are very careful about the intriguing selection issiies involved, and we also take account of the severe attrition in the data set. Neglecting selection effects would lead to the result that training outside of the firm shows strong negative effects on employment probabilities whereas training in the firm shows strong positive effects. However, when taking account of selection effects, the results are completely reversed. Contrary to what is often alleged, we find in particular that training outside of the firm shows a considerable positive effect on the employment probability during the sample period.

Suggested Citation

  • Fitzenberger, Bernd & Prey, Hedwig, 1995. "Assessing the impact of training on employment: The case of East Germany," Discussion Papers 23, University of Konstanz, Center for International Labor Economics (CILE).
    • Handle: RePEc:zbw:koncil:23
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    References listed on IDEAS

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    5. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
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    7. Card, David & Sullivan, Daniel G, 1988. "Measuring the Effect of Subsidized Training Programs on Movements in and out of Employment," Econometrica, Econometric Society, vol. 56(3), pages 497-530, May.
    8. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
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    10. Lechner, Michael, 1993. "The dynamics of self-employment in East Germany: an empirical analysis using panel data and allowing for state dependence and endogenous attrition," ZEW Discussion Papers 93-24, ZEW - Leibniz Centre for European Economic Research.
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    Cited by:

    1. Fitzenberger, Bernd & Prey, Hedwig, 1996. "Training in East Germany: An evaluation of the effects on employment and wages," Discussion Papers 36, University of Konstanz, Center for International Labor Economics (CILE).
    2. Lechner, Michael, 1995. "Effects of continuous off-the-job training in East Germany after unification," ZEW Discussion Papers 95-27, ZEW - Leibniz Centre for European Economic Research.
    3. R. Hujer & K.-O. Maurer & M. Wellner, 1997. "The Impact of Training on Unemployment Duration in West Germany -Combining a Discrete Hazard Rate Model with Matching Techniques-," Econometrics 9705001, University Library of Munich, Germany.
    4. Klaus Schömann & Christoph Hilbert, 1998. "The Youth Labour Market in Germany - a New Target Group for German Labour Market Policies?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 67(4), pages 272-285.
    5. Prey, Hedwig & Fitzenberger, Bernd & Franz, Wolfgang, 1997. "Wirkungen von Maßnahmen staatlicher Arbeitsmarkt- und Beschäftigungspolitik," Discussion Papers 45, University of Konstanz, Center for International Labor Economics (CILE).
    6. Michael Lechner, 2000. "An Evaluation of Public-Sector-Sponsored Continuous Vocational Training Programs in East Germany," Journal of Human Resources, University of Wisconsin Press, vol. 35(2), pages 347-375.
    7. Kraus, Florian & Puhani, Patrick A. & Steiner, Viktor, 1997. "Employment Effects of Publicly Financed Training Programs The East German Experience," ZEW Discussion Papers 97-33, ZEW - Leibniz Centre for European Economic Research.
    8. R. Hujer & K.-O. Maurer & M. Wellner, 1997. "Estimating the Effect of Training on Unemployment Duration in West Germany - A Discrete Hazard-Rate Model with Instrumental Variables," Econometrics 9704001, University Library of Munich, Germany.
    9. Pfeiffer, Friedhelm & Brade, Joachim, 1995. "Weiterbildung, Arbeitszeit und Lohneinkommen," ZEW Discussion Papers 95-14, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    training; employment probabilites; selection; dynamic random-effects probit;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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