DP5171 The Curse and Blessing of Training the Unemployed in a Changing Economy: the Case of East Germany after Unification

Author(s): Michael Lechner, Ruth Miquel, Conny Wunsch
Publication Date: August 2005
Keyword(s): active labour market policy, causal effects, gender differences, matching estimation, nonparametric identification, panel data, programme evaluation
JEL(s): J68
Programme Areas: Labour Economics, Public Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=5171

We analyse the effects of government sponsored training for the unemployed conducted during East German transition. For the microeconometric analysis, we use a new, large and informative administrative database that allows us to use matching methods to reduce potential selection bias, to study different types of programmes, and to observe interesting labour market outcomes over eight years. We find that, generally, all training programmes under investigation increase long-term employment prospects and earnings. However, as an important exception, the longer training programmes are on average not helpful for their male participants. At least part of the explanation for this negative result is that caseworkers severely misjudged the structure of the future demand for skills.