Macroeconomic Impacts of Job Creation Schemes on the Matching Process in West Germany

Abstract

This paper investigates the macroeconomic effects of job creation schemes on the matching processes in West Germany. The empirical analysis is based on regional data for local employment office districts for the period from May 2003 to December 2004. The empirical model relies on a dynamic version of a matching function augmented by active labour market policy. In order to obtain consistent estimates in the presence of a dynamic panel data model, a first-differences GMM estimator and a transformed maximum likelihood estimator are applied.