Regional discontinuities and the effectiveness of further training subsidies for low-skilled employees

I analyze the effects of further training subsidies for low-skilled employees on individual labor market outcomes in Germany for the period from 2007 to 2012. Using detailed administrative data, I exploit cross-regional variation in the conditional policy styles of local employment agencies and use this fuzzy discontinuity as an instrument for program participation. I find that subsidies significantly increase cumulative employment duration and earnings for the subgroup of compliers. These gains are particularly pronounced for workers who are women, younger than 35 years old, non-German citizens and participated before the economic crisis of 2009.