The effects of vocational training programmes on the duration of unemployment in Eastern Germany

Summary Vocational training programmes have been the most important active labour market policy instrument in Germany in the last years. However, the still unsatisfying situation of the labour market has raised doubt on the efficiency of these programmes. In this paper, we analyse the effects of the participation in vocational training programmes on the duration of unemployment in Eastern Germany. Based on administrative data for the time between the October 1999 and December 2002 of the Federal Employment Administration¹, we apply a bivariate mixed proportional hazards model. By doing so, we are able to use the information of the timing of treatment as well as observable and unobservable influences to identify the treatment effects. The results show that a participation in vocational training prolongates the unemployment duration in Eastern Germany. Furthermore, the results suggest that locking-in effects are a serious problem of vocational training programmes. The authors thank Heinz Galler and an anonymous referee for valuable comments. The paper has also benefited from fruitful discussion at the annual meeting of the German Statistical Society in 2004, Frankfurt, and in IZA seminar, Bonn. All remaining errors are on our own. Financial support of the IAB, Nuremberg, is gratefully acknowledged.