Deja Vu? Short-Term Training in Germany 1980-1992 and 2000-2003

Over the past few years, active labor market policies (ALMP) have placed a greater emphasis on job search assistance, monitoring and testing work availability, as well as limited training to activate the unemployed in the short run. In Germany, the focus on activation strategies is reflected in the recent shift away from traditional longer further training programs, typically lasting a couple of months up to two years, to short–term training programs lasting between two and twelve weeks. Current short– term training programs in Germany have two main goals. First, they are supposed to enhance reintegration of the participants into employment through guidance and qualification (like job-application training, general counseling on job search methods or limited computer skills). The second aim of short–term training is to assess the job seekers’ labor market opportunities and their suitability for different jobs but also their availability and willingness to work. Already in the 1980s and in the early 1990s, short–term training programs similar in nature to short–term training in the 2000s was in place in Germany. While activation and monitoring is a major goal of modern short–term training, the older short–term training focus solely on job search assistance, limited training, and guidance towards future participation in longer training programs. This paper estimates the effects of short–term training programs in West Germany starting in the time period 1980 to 1992 and 2000 to 2003 regarding the two outcomes employment and participation in longer–term training programs. In particular, we contribute to the literature regarding the following three points: 1) Our paper is the first using administrative data covering such a long time period, namely 18 years in the 1980s and 1990s and four years in the early 2000s to study the medium– and long–term employment effects of short–term training. 2) This paper is the first to use state–of–the–art estimators of treatment effects for the short–term training programs in the 1980s and early 1990s. 3) We analyze the effectiveness of different types of short–term training. Because the older short–term training programs were not intended to test and monitor the unemployed, we distinguish two versions of short–term training in the 2000s, namely the training variant which focuses on skill provision and the checking variant which focuses on testing and monitoring search effort. We argue that the short–term training in the 1980s and 1990s are more similar to the training variant of modern short–term training. Our results show that short–term training shows mostly persistently positive and often significant employment effects. The effects are particularly strong when participation starts during months 7 to 12 of the unemployment spell. We tend to find smaller effects for short–term training starting during the second year of the unemployment spell. Short–term training focusing on testing and monitoring search effort shows slightly smaller effects compared to the pure training variant. The lock–in periods lasted longer in the 1980s and 1990s compared to the early 2000s. Short– term training results in higher future participation in longer training programs and this effect was much stronger for the earlier time period. The employment effects of the older short–term training programs did not change significantly by year between 1980 and 1992, i.e. there is no evidence for business cycle effects. The fact that we find some long lasting effects of short–term training may be surprising given their short duration. These programs by themselves do not provide a sizeable human capital investment. Future research should investigate the hypothesis that the positive program effects can be traced back to the higher participation rates in longer training programs.

Fitzenberger, Bernd, Olga Orlyanskaya, Aderonke Osikominu and Marie Waller (2008), Deja Vu? Short-Term Training in Germany 1980-1992 and 2000-2003, ZEW Discussion Paper No. 08-038, Mannheim.