"In 2005 major reforms of the means-tested unemployment benefit system were implemented in Germany. One element of the reforms was to activate benefit recipients by a workfare programme, the so-called One-Euro-Job programme. More than 600,000 benefit recipients entered this programme in the year...

This paper assesses the relationship between institutions, output, and productivity, when official output is corrected for the size of the shadow economy. Our results confirm the usual positive impact of institutional quality on official output and total factor productivity, and its negative...