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Give them a break! Did activation of young welfare recipients overshoot in Germany? A regression discontinuity analysis
In Germany, due to special rules, 15- to 24-year-old welfare recipients registered with the Public Employment Service from the start of their registration are highly targeted by mandatory activation policies. We investigate the effects of the special rules in terms of enhancing the (re-)employment probability, increasing earnings and reducing benefit dependency of targeted people in East and West Germany in the short- and the long-run. Using a registry dataset of the inflow into unemployment and welfare over the period October 2005 to January 2006 the study exploits the age related eligibility rule to identify a suitable counterfactual using a regression discontinuity design. Our estimates imply zero or negative effects of the special rules for men in East and in West Germany who are slightly younger than 25 years. There is one possible explanation to our finding. An excessive targeting of young welfare recipients by active labour market programmes that is mostly driven by the choice of an arbitrary age threshold may lead to a low quality of matches between programmes and participants.
Joachim Wolff is currently head of the research department “Basic Income Support and Activation” at the Institute of Employment Research, Nuremberg, Germany. He has obtained his Ph.D. in Economics at the European University Institute, Florence, in 1998. He was a lecturer and researcher at the Department of Economics of the Ludwig-Maximilian-University in Munich from 1998 to 2005 and worked as a scientific staff member for the German Council of Economic Experts from 1991 to 1994. His research interests include labour economics and applied econometrics, with a focus on activation policies for welfare recipients and their effects.
IRVAPP/Fondazione Bruno Kessler - Via Santa Croce 77 - Trento
The presentation will be in English.