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In East Germany, active labor market policies (ALMPs) are used on a large scale to contain fast rising unemployment after unification. This paper evaluates the effects for participants in public employment programmes (PEPs), that are an important part of ALMPs. It focuses on individual unemployment probabilities. By concentrating on the state of Sachsen-Anhalt, the econometric analysis can use a new and large panel, the Arbeitsmarktmonitor Sachsen-Anhalt. We aim at nonparametric identification of the effects of PEPs by combining control group comparisons with differencing over time to correct for selection effects. Our results indicate that PEP participation reduces the unemployment risk of the participants.

An Evaluation of Public Employment Programmes in the East German State of Sachsen-Anhalt