Performance of Active Labour Market Policy in Germany
15
be renewed repeatedly without justification. The reform reduced the
minimum age for which this regulation applies to 52 years. Furthermore, ex-
emptions from dismissal protection, which before the reform were conceded
to small firms with 5 employees or less, will now include firms with up to 10
employees.
4. Labour Market Policy Effectiveness Before and After Hartz
For a long time the evaluation of German ALMP had suffered from the lack of
suitable data. Only very recently good quality data has become relatively
widely available to researchers. Early studies on ALMP effectiveness were
usually based on the GSOEP (German SocioEconomic Panel) or, for East
Germany, the Labour Market Monitor East. The main drawback of these data
is that, due to rather small overall sample sizes and panel mortality, they
contain only few observations on participants of active labour market
measures. Researchers often had to group together heterogeneous measures
and some programmes could not be evaluated at all because participation was
not documented in the data.
It was only at the end of the 1990s that the government started to acknowledge
the need for a thorough evaluation of active labour market policies, and, in the
following years, considerable effort was made to derive large data sets from
administrative data on the local employment agency level (Bender et al. 2005).
These data provide a large number of observations and cover rather long time
periods. They therefore allow detecting short- as well as long-term effects and
provide enough information to better distinguish different types of treatment
and to analyse the optimal timing of events. These merged administrative data
have become available to researchers recently and seem to be able to provide
robust results. Most of the evaluation studies of the Hartz reforms make use of
this type of data.
Early evaluation studies mainly concentrate on training and job creation
schemes, which for a long time were the most important measures in terms of
expenditure and number of participants (recall Figure 1). Fitzenberger/
Speckesser (2000) provide a survey on early evaluation studies in Germany,
most of which are based on the above-mentioned rather poor data. Caliendo/
Steiner (2005), who update that review, and Wunsch (2005), who discusses the
development of the German labour market since unification, include recent
pre-Hartz studies based on the new and better data. The post-Hartz studies we
discuss in the following sub-sections result from the evaluations of the Hartz
laws I-III. The evaluation of Hartz IV, which basically comprises the reform of
the benefit system and introduction of benefit type II combining unem-
ployment and social assistance, will only begin in autumn of 2006.