Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany



Performance of Active Labour Market Policy in Germany

19


for training programmes providing specific professional skills. The findings of
Lechner et al. (2004) suggest that short and long training have positive effects
on employment rates in the short run. In the long run short training and re-
training show positive results. Furthermore, they find significantly positive
effects on monthly earnings for short and long training.

As delineated in Section 3, the reform changed the usage and set up of training
in various aspects. First, positive effects might be expected from the reduction
of participants and deliberate cream skimming as part of the selection process.
Second, the duration of programmes has been reduced and participation will
take place, on average, at an earlier stage in the unemployment spell. Third,
course quality is expected to improve by increased competition between pro-
viders and the priority of efficiency criteria.

The study evaluating training measures post-Hartz was conducted by IZA/
DIW/infas (2005) and uses administrative data and survey data to compare
the effect of training measures before the reform in the period 2000 to 2003
with effects after the reform in the period 2003 to 2005. The results confirm the
previous results of severe locking-in effects. They suggest that the positive
results in the medium and long run are based on the positive employment
effect on persons who otherwise would have drifted into non-participation.
Furthermore, effects of pre-reform measures seem to be less positive when
taking employment stability into account. As expected, the results indicate
that the reform succeeded in significantly reducing locking in effects, though
evidence on long-term effects of the modified training measures are not yet
available at the time being. The cost-effectiveness of measures before the
reform was negative. By reducing course durations and better targeting, the
reform was able to reduce the gap between costs and benefits, though the
balance is still negative.

Job Creation Schemes

For a long time, job creation schemes could be evaluated only for East
Germany because data sources that provide information on participation in
job creation schemes were limited to East Germany only. These are the
Labour Market Monitor East which is used by Hübler (1997), the Labour
Market Monitor of the federal state Saxony-Anhalt, which is used by
Bergemann et al. (2000), Eichler/Lechner (2002) and Bergemann (2005), and
the Mikrozensus Saxony used by Reinowski et al. (2003).

None of the studies finds positive effects on the employment rate, apart from
Eichler/Lechner (2002) who find positive employment effects, although for
men only. Reinowski et al. (2003) use the hazard rate of transition from unem-
ployment to employment as a dependent variable, where unemployment
spells include periods of participation. They do not find positive effects of



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