Effectiveness of Further Vocational Training in Germany - Empirical Findings for Persons Receiving Means-tested Unemployment Benefits

Further vocational training for the unemployed aims at enhancing their job prospects. This paper analyzes the effectiveness of subsidized training programs for means-tested unemployment benefit recipients in Germany. The empirical findings are based on rich administrative data from the German Federal Employment Agency using propensity score matching to construct a suitable comparison group. We consider the initiation of training in early 2005, just after the reform of the German means-tested benefit system, which aimed at activating hard-to-place job-seekers, and after the introduction of a voucher system as the sole assigning mechanism for vocational training. We estimated the effects of vocational training for several groups differentiated by age, gender, migration background, skills, program duration, length of time since last job and differences between East and West Germany. As a result, we show that vocational training has a considerable beneficial impact on participants as it raises the employment rate in the intermediate term by up to 13 percentage points, and - with a slightly lower impact - it reduces the number of unemployment benefit II recipients.