The Effects of Active Labor Market Programs in Germany: An Investigation Using Different Definitions of Non-Treatment

This paper estimates the effects of several German labor market programs – starting in March 2003 – on the employment outcomes of participants using propensity score matching. The main objective is to analyze how estimated average treatment effects vary with the choice of the classification window that defines treatment and non-treatment. The first approach does not put any restrictions on the future of the treated as well as of their comparison group. This approach has become more and more common in the evaluation of European labor market policies. In contrast, the second approach considers only potential comparison groupmembers, who have not entered any labor market program during the entire observation period of 31/2 years. The third approach additionally restricts itself to participants, who have not participated in further labor market programs during the observation period. The results differ considerably; program effectiveness is estimated to be much lower using the second approach. The paper highlights the fact that program careers are a non-trivial issue that deserves more attention in future research.