Does Active Labor-Market Policy Affect Structural Unemployment? | An Empirical Investigation for West German Regions, 1986 to 1993

The study is concerned with the impact of active labor-market policy on the unemployment problem in the case of West Germany. Based on a disequilibrium approach the focus is on the effects of continuous training programs and job-creation schemes on the labor-market matching efficiency. Using data for 74 regions in the period 1986 to 1993 and taking care of the endogeneity of those measures no effects of training programs are found. But, for job-creation schemes the estimates reveal positive effects on the matching efficiency, indicating that these measures contributed to a reduction in the structural rate of unemployment in West Germany during the time period considered