Effectiveness of further vocational training in Germany: Empirical findings for persons receiving means-tested unemployment benefit

Further vocational training for the unemployed aims at enhancing their job prospects. This paper analyses the effectiveness of such subsidized training programmes for means-tested unemployment benefit recipients in Germany. The empirical findings are based on rich administrative data of the German Federal Employment Agency using propensity score matching to construct a suitable comparison group. We consider initiation of training in early 2005, just after the reform of the German means-tested benefit system, which aimed at activating hard-to-place jobseekers, 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, programme duration, duration since the end of the last job and differences between East and West Germany. As a result we show that vocational training has a considerable beneficial impact on participants: It reduces the share of unemployment benefit II recipients and raises the employment rate in the intermediate term by up to 13 percentage points.