The Employment Effect of Reforming a Public Employment Agency

43 Pages Posted: 18 Sep 2015

See all articles by Andrey Launov

Andrey Launov

University of Wuerzburg; IZA Institute of Labor Economics

Klaus Wälde

University of Mainz; CESifo (Center for Economic Studies and Ifo Institute); UCL at Louvain la Neuve

Date Written: August 20, 2015

Abstract

By how much does an increase in operating effectiveness of a public employment agency (PEA) and a reduction of unemployment benefits reduce unemployment? Using a recent labour market reform in Germany as background, we find that an enhanced effectiveness of the PEA explains about 20% of the observed post-reform unemployment decline. The role of unemployment benefit reduction explains just about 5% of the observed decline. Due to disincentive effects resulting from the reform, the reform of the PEA could have had an even higher impact on unemployment reduction if there had been less focus on long-term unemployed workers.

Keywords: employment agencies, unemployment benefits, labour market reform, unemployment, structural model

JEL Classification: E240, J650, J680

Suggested Citation

Launov, Andrey and Wälde, Klaus, The Employment Effect of Reforming a Public Employment Agency (August 20, 2015). CESifo Working Paper Series No. 5477, Available at SSRN: https://ssrn.com/abstract=2661401

Andrey Launov (Contact Author)

University of Wuerzburg ( email )

Sanderring 2
Würzburg, D-97070
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Klaus Wälde

University of Mainz ( email )

Mainz School of Management and Economics
Mainz, 55128
Germany
+49 6131 3920143 (Phone)

HOME PAGE: http://www.waelde.com

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

UCL at Louvain la Neuve

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

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