Should Local Public Employment Services be Merged with the Local Social Benefit Administrations?

term unemployed in the first place. Clearly, they must have thought that they are better able
to care for the long-term unemployed if they do not merge with the local public employment
service. One reason might have been that the institution “Approved Local Provider” allowed
local authorities to design the organisation and activation process for the long-term
unemployed according to their own agenda, while the institution “Joint Local Agency”
limited local authorities’ scope to shape the organisational structure, because local
authorities and the Federal Employment Agency had to agree on the organisational
characteristics of the local job centre. This restriction might have induced regions that
believed that they could better organise the activation process of the long-term unemployed
on their own to apply to become Approved Local Providers. The unique dataset on
organisational characteristics allows us to investigate this hypothesis and to shed some light
on the factors that determine a successful institution.

Table 4 allows us to gain further insight into the organisational characteristics used by
job centres. Many organisational characteristics are not unique to one of the two institutions,
but can be found in either Approved Local Providers or Joint Local Agencies. Even though
the Federal Employment Agency had to agree with the organisation implemented by Joint
Local Agencies, Joint Local Agencies were able to implement different organisational
features as the considerable diversity of the organisational characteristics in Joint Local
Agencies in Table 4 shows.

Table 4: Organisational characteristics of job centres

Approved Local Joint Local

Providers           Agencies

Source: Own calculations based on the survey IAW-SGBII-Organisationserhebung.

We examine the role of these organisational characteristics by including sets of
organisational variables step by step into our IV regression. Table 5 presents the estimates of

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