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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.

Inhaltsverzeichnis

Frontmatter

I. Introduction

Abstract
Currently there appears to be a rather broad consent among politicians of developed countries - and indeed among many economists as well - that job training is good for the economy. It increases the skills of the labour force and hence reduces long-term unemployment that is a particular problem for low-skilled workers. In addition it is believed that for the employed earnings will increase as well in response to the additional skills acquired. Therefore, a broad consensus among the special interest groups, such as unions and employers in the large industrial nations is not surprising, at least as long as the public sector bears part of the cost. This situation is neatly described by the first part of the quotation from The Economist (1996) given on the right hand side of this page. The last part of the quotation already indicates that this view may be too optimistic.
Michael Lechner

II. Estimates of the Effects of Training

Abstract
It has been noted in Chapter I that unification of East and West Germany in July 1990 - Economic, Social and Monetary Union - came as a shock to the formerly centrally planned East German economy. The almost immediate imposition of the West German type of market economy with all its distinctive institutional features and its relative prices led to dramatic imbalances in all markets. For example the official unemployment rose from about 2% in the GDR to more than 15% in 1992. It remained on that high level for the following years. To avoid higher unemployment as well as to adjust the stock of human capital to the new demand structure the government conducted an active labour market policy (see section 1.2). The evaluation of the continuous vocational training and retraining as part of that policy is the focus of this part of Chapter II. Since more than DM 25 bn were devoted to this purpose by the end of 1993, the need for an evaluation is obvious. This study presents estimates of the average individual gains for the workers of the former GDR participating in such training beginning between July 1990 and December 1992. The targets of the evaluations are labour market outcomes after the completion of the training, such as earnings, labour market status, and career prospects.
Michael Lechner

III. Bounds for the Effects of Training

Abstract
There is a long discussion in the econometric literature on how identification of causal effects in training evaluation studies could be achieved in cases when no data from a social experiment is available. As has been pointed out in Sections I.4 and II.1.4, when the assignment to the treatment and control group is not random, knowledge of the assignment mechanism is necessary to adjust estimates of the mean effects accordingly. In practice, for many cases complete information on this mechanism is not available. Then there are several other ways to proceed.
Michael Lechner

IV. Conclusions and Outlook

Abstract
’Zero is not a bad number’ was the reply of James Heckman from the University of Chicago when asked about how much a large US training programme - the Job Partnership Act - has helped its participants. Zero is not a bad number’ is also the answer of this work when considering the employment and earnings effects for the participants of the large subsidized training programmes conducted in East Germany after unification. Even for enterprise-related training there appears to be no reduction of the threat of unemployment, but at least there is some indication that participation in such training increases earnings.
Michael Lechner

V. References

Without Abstract
Michael Lechner

Backmatter

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