published in: Applied Economics, 2007, 39 (18), 2279–2301
This paper investigates whether and to what extent employment policy measures (co-)
financed by the European Social Fund in Germany meet their objective. Specifically, it is
analyzed whether qualification programs for employed workers in the German state of
Saxony were effective in terms of employment protection. To this end, a control function
approach is implemented which utilizes a unique firm-level dataset. This model explicitly
accounts for unobserved heterogeneity between participating and non-participating
companies by modeling the participation decision process. Our results suggest a positive
effect of program participation. However, this positive treatment effect varies considerably
across different sub-groups of the treatment as well as the comparison group.
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