Multiple active labor market policy participation in East Germany: an assessment of outcomes

Abstract

This paper evaluates employment effects of job creation schemes and further training in East Germany for the period 1990-1998. Multiple participation in programs is quite frequent. Taking account of recurrent participation, we identify the causal effect of the treatment-on-the-treated by a two-step procedure: First, we apply the matching technique based on estimated propensity scores. Secondly, we use a difference-in-differences estimator. Hereby, we especially take account of Ashenfelter's Dip involving a decrease in the participants' employment shortly before the start of a program which is presumably due to the anticipation of the participation. Except for certain participants in a second treatment, our results show at best insignificant long-term employment effects of active labor market policy. However, the results also indicate that a more careful analysis of employment dynamics is warranted.