An evaluation of public employment programmes in the East German State of Sachsen-Anhalt

In East Germany, active labour market policies (ALMPs) have been used on a large scale to contain the widespread unemployment that emerged after unification. This paper evaluates the effects for participants in public employment programmes (PEPs), an important component of ALMP in the East German States (Länder). The paper focuses on individual unemployment probabilities. By concentrating on the state of Sachsen-Anhalt, the econometric analysis can use a large new panel data set available only for that state, the Arbeitsmarktmonitor Sachsen-Anhalt (AMM-SA). We aim at nonparametric identification of the effects of PEPs by combining the use of comparison groups with differencing over time to correct for selection effects. Our results indicate that PEP participation reduces participants' probability of unemployment.