Lena Jacobi and Jochen Kluve
1. Introduction
In times of high unemployment, the necessity of labour market reforms is dis-
cussed all over Europe. Many countries have either started or already finished
far-reaching reforms. Also in Germany the need for reforms had become ap-
parent over the past decades, when unemployment was rising constantly and
public budgets tightened. Finally in 2002, the government took advantage ofa
scandal involving the federal employment office1 to overcome the so-called
reform logjam (“Reformstau”) and start a series of rather radical - given the
prior reluctance - policy changes.
The resulting Hartz reforms - named after the chairman heading the com-
mission that worked out the reform package - constitute a comprehensive
modification of active and passive labour market policies. It is considered the
most far-reaching reform endeavour in the history of the German welfare
state, and consists of four laws Hartz I-IV that were gradually implemented on
Jan 1st 2003 (Hartz I and II), Jan 1st 2004 (Hartz III), and Jan 1st 2005 (Hartz
IV). The laws contain a comprehensive set of specific policy measures that
came into force at various points in time during the years 2003 - 2005, and that
merge to a three-part reform strategy: (a) improving employment services and
policy measures, (b) activating the unemployed, and (c) fostering employment
demand by deregulating the labour market. To this end, the reform radically
modernised the organizational structure of public employment services,
modified many of the already existing measures of Active Labour Market
Policy (ALMP) and introduced a set of new ones. The reform fundamentally
changed the institutional and legal framework that determines the rights and
duties of the unemployed, most importantly, the benefit system. Furthermore,
employment protection was reduced in some segments of the labour market.
In this context, it is also the first time in the history of the German welfare
state that a policy reform is accompanied by a comprehensive scientific eval-
uation. The government explicitly tied the implementation of the Hartz laws
to an evaluation mandate. Given the scope of the reform endeavour, the eval-
uation was commissioned by the government as a set of work packages and
modules, aiming at an evaluation of both the Hartz reforms in their entirety
and each particular element on its own.2 In practice, the Hartz evaluation
therefore has involved more than 20 economic and sociological research in-
stitutes who, using methods based on qualitative case study approaches as well
as rigorous econometric analyses of administrative and survey data, face the
challenge of disentangling impacts of specific measures in a setting charac-
terised by (a) the simultaneous alteration of measures and institutional
1 The federal employment office was accused of massive fraud in the reporting of successful job
placements.
2
2 Fertig/Kluve (2004) develop a conceptual framework for this endeavour.