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After unification large amounts of money were spent to retrain the East Germany labour force in order to ease the transition to the new market economy. This book uses microeconometric methods and individual data to evaluate the impact of these training programmes on the participants' labour market situation. It discusses the appropriate evaluation methodology as well as the effectiveness of the actual programmes for the individual participants. The empirical results suggest that the public sector sponsored training programmes were fairly ineffective. In contrast, the training organized and paid by the enterprises caused considerable earnings growings.
Retraining the labor force to match the demands of a modern economy is an important task during the transition process from a centrally planned to a market economy. This need is particularly pressing in East Germany, because the transition process is much faster there than in the rest of Eastern Europe. Therefore, substantial resources are devoted to this purpose. This paper analyzes the impact of continuous off-the-job training in East Germany from the point of view of the individuals who were in the labor force before German unification in 1990. It answers questions about the average gains from participating in a specific type of training. Typical outcomes considered to measure these gains are income, employment status, job security and expected career prospects. The methodology used for the empirical evaluation is the potential outcome approach to causality. This approach has received considerable attention in the statistical literature over the last 15 years, and it has been recently rediscovered by the econometric literature as well. Here, it is adapted to allow for important permanent and transitory shocks that influence the decision to participate in the training as well as future labor market outcomes. The empirical results are based on the first five waves of the Socio-Economic Panel (GSOEP)-East (1990-1994). This panel data set has the advantage that the fourth wave contains a special survey on continuous training and that it allows to keep track of individual behaviour on a monthly, respectively yearly, basis. The econometric analysis focuses on off-the-job training courses that began after unification. Although it is obviously too early to evaluate the long-run implications, the results suggest that at least in the short-run there are no positive effects.
"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 8 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"--Forschungsinstitut zur Zukunft der Arbeit web site.
In recent years the German economy has grown sluggishly and created few new jobs. These developments have led observers to question the future viability of a model that in the past seemed able to combine economic growth, competitiveness in export markets, and low social inequality. This volume brings together empirical and comparative research from across the social sciences to examine whether or not Germany's system of skill provision is still capable of meeting the economic and social challenges now facing all the advanced capitalist economies. At issue is the question of whether or not the celebrated German training system, an essential element of the high-skill, high-wage equilibrium, can continue to provide the skills necessary for German companies to hold their economic niche in a world characterized by increasing trade and financial interdependence. Combining an examination of the competitiveness of the German training system with an analysis of the robustness of the political institutions that support it, this volume seeks to understand the extent to which the German system for imparting craft skills can adjust to changes in the organization of production in the advanced industrial states.
A historically unique experiment is about to enter its second decade - German unification. Early hopes for a rapid and smooth economic transformation soon turned out to be overly optimistic. Despite massive financial transfers, the political promise of a "blooming landscape" remains a vision. Actual developments have left deep scars on the labor market, and the effects will be felt for decades to come. Was this outcome to be expected, perhaps even inevitable? What went wrong, and what were the available options? Or is the current state of Eastern German labor market in fact better than is commonly assumed?