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



Performance of Active Labour Market Policy in Germany

25


Table 2

Effects1 of the Hartz Reforms

Measure

Evidence

Reform effect

before

after

(a) Increasing effectiveness and efficiency of labour market services and policy measures

Placement Services

General

(+)

(+)

(+) Introduction of one-stop-
centres seems positive, but
significance of effects unclear

Placement voucher2

n/a

0

0 No significant effect on
re-employment probability

Assignment to private
placement providers2

n/a

0

0 No significant effect on
re-employment probability

Placement via temporary work
(PSA)

n/a

-

- PSA reduce the employment
probability of participants

Training

0 older
studies /
(+) more

recent
studies

+

+ Exit rate to employment
increased, locking-in effects
reduced

Public job creation

-

(-)

- Measure remains detrimental
after the reform

(+) Magnitude of negative effect
decreases

Impact on “employability” unclear

(b) Activating the unemployed

Wage subsidies to employers
(Integration subsidies)2

(+)

+

+ 20-50 percentage points higher
probability of regular employment
post-treatment. Extent of windfall
gains unclear.

Start-up subsidies (Bridging
allowance and “Me, Inc.”)

(+)3

+

+ Subsidy significantly reduces risk
of unemployment (decreasing over
time). Some windfall beneficiaries
exist.

Make work pay

Wage protection for elderly

n/a

0

0 No significant effect.

Minijobs

n/a

+

+ Reform caused large increase in
employees in Minijobs (+1.8 Mill.).
(-) Inflow from unemployment
low. Incidence of intra-enterprise
displacement cannot be ruled out

Midijobs

n/a

(+)

(+) Modest effect on creation of
Midijobs (+125,000). Incidence of
intra-enterprise displacement
cannot be ruled out

(c) Fostering employment demand by labour market deregulation

Temporary work deregulation        n/a         +     + 23,700 additional employees in

temporary work 6 months after
reform (short-term). Deregulation
widely acclaimed

Fixed-term contracts for elderly n/a         0     0 No significant effect

1Labour market effects: + positive, (+) modestly positive, 0 zero, (-) modestly negative, - negative.
- 2Already since early 2002. - 3Pre-reform evidence on bridging allowance only.



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