Before matching, our base sample consists of roughly 10,000 persons taking up a subsidized and 170,000 persons taking up an unsubsidized job. In West Germany, around 3% of all hires in the sample were subsidized; more than 10% were subsidized in East Germany. The mean actual duration of subsidization amounted to 4 months in West Germany, to 5 months for men in East Germany and to 6 months for women in East Germany. We do not have individual information on the size of the subsidy, but information merged through cost accounting at the local level indicates that the average daily subsidy amounted to about 20 Euros, with average costs of subsidization around 2,500 Euros in West Germany up to more than 3,000 Euros for East German female workers.
Table 3 in the Appendix presents mean values of the variables underlying the propensity score matching before the matching took place. Mean characteristics of workers taking up subsidized or unsubsidized employment, respectively, differ partly: a) Regarding socio-demographics, workers supported by a subsidy have over-proportionally received unemployment assistance compared to those who took up an unsubsidized job; differences are rather small regarding further features. b) Looking at the job characteristics, more of those in subsidized jobs are occupied in a white collar job, less often in a manufacturing occupation. c) Subsidized employment relationships are found comparatively more often in urban labor markets with high or medium unemployment as well as in rural areas with below average unemployment. d) Rather strong selectivity effects seem to exist on the firm's side. Subsidized employment can be found over-proportionally in small firms and in branches such as sales and data processing, R&D and other economic services. A much higher share of unsubsidized than of subsidized workers takes up work in the construction sector, in hotels and restaurants, as well as in temporary help. Furthermore, subsidized workers are less often found in high wage firms. e) Turning to the individual labor market history, those who took up a subsidized job have participated more often in another labor market program during their current unemployment spell and had been unemployed for longer than those who found a job without the help of a subsidy. During the years preceding their unemployment spell, they have spent less time in employment and more time in unemployment. Also, the share that had already participated in labor market programs and had experienced sickness periods is significantly higher. Taken all together, differences between subsidized and unsubsidized workers seem to manifest themselves mainly in the labor market history of workers (less in their socio-demographic characteristics) and in the selection into smaller firms within particular branches.
To convey an impression of the unconditional wage distributions, Fig. 1 shows kernel estimates of the distribution of daily starting wages for the four groups under consideration. Average daily starting wages are found in the first column of 1a) in Table 2, which presents the main results of the wage analysis. Before matching, the mean starting daily wage after taking up the job (1a) is significantly lower for subsidized workers across all four groups investigated; the difference is around twice as large in West Germany (around 4 to 5 Euros) than in East Germany (around 2 Euros). As is usually found, wages are higher in West than in East Germany and higher for male than for female workers. It is noteworthy that average wage rates are rather low for our entire sample of previously unemployed individuals, and in particular for subsidized workers: Rhein and Stamm (2006) utilize the same data base underlying our wage information, the employment history files (BeH), to estimate the low-wage threshold for Germany, defined as two thirds of the median wage rate of all employment relationships observed at June 30. For the year 2003, the threshold amounted to a monthly wage rate of 1,772 Euros in West and 1,273 Euros in East Germany. Assuming that a month has 30 days, this corresponded to a daily wage rate of 59 Euros in West and 42 Euros in East Germany. Thus, in our sample, subsidized male workers in West Germany (62 Euros) are on average just above the low-wage threshold, while female workers (49 and 39 Euros, respectively) are generally found below, and only male workers in East Germany (51 Euros) earn on average considerably more.
Regarding the matching results, the mean standardized bias (MSB; given in the last rows of Table 2) between the two groups of workers decreases considerably through matching, indicating a very good quality of the comparison group. Furthermore, t-tests on equal means between treatment and comparison groups after matching could not be rejected after matching at \( \alpha \) \( = \) 0.05 for any variable and any sample presented in Table 3 in Appendix 1 (variable means after matching are shown in Table O.1 in the electronic supplementary material).
After the matching took place, the differences in starting wages decline considerably and remain significant only for East German men. Thus, unconditional wage differences between subsidized and unsubsidized workers can mostly be explained by the characteristics of the worker, the local labor market and the firm. Results are similar if we take a look at the mean daily wage during days of employment in the 3.5 years after taking up the job (1b).
However, if we compute the average of daily wages across these 3.5 years, assuming zero wages for days without employment (1c), we find that subsidized workers earn 2 to 4 Euros more per day than their unsubsidized counterparts after matching. The underlying reason is depicted in Fig. 2: The share of subsidized workers in regular employment is usually higher during the observation period than the share of unsubsidized workers. In particular, during the first months in employment, subsidized employment relationships are more stable than unsubsidized ones (see also Ruppe 2009; Jaenichen and Stephan 2009) and seem to be less subject to seasonal adjustments – even within the same branches. While differences in employment shares are only partly significant in West Germany, they are quite substantial in East Germany. The aforementioned “protection period” might be an important reason for longer job durations of previously subsidized workers. Furthermore, we cannot preclude the possibility that firms hire subsidized workers in particular in jobs that are characterized by on average longer tenure, thus selection may still play a role on the firm's side.
In a next step, we compare the wage rates described above with appropriate “counterparts” that workers had received before their unemployment spell, to cancel out time-constant unobserved individual heterogeneity among workers that might have remained after matching on observables. If we compare the starting wage with the last wage earned before unemployment (2a), we find that subsidized workers – compared to all other newly hired workers – have experienced a significantly larger mean gain in daily wages, ranging from about 1 to nearly 4 Euros in the four groups investigated. However, compared to the selected comparison group of unsubsidized workers, the difference vanishes and turns – while small – even significantly negative for male East German workers. Results for the matched sample are similar for mean daily wages of subsidized and similar unsubsidized workers, cumulated over longer periods (2b). Comparing mean wages over these time periods and imputing wages of zero for days without employment, we find a mean wage gain of subsidized compared to all unsubsidized workers (2c) of about 6 to 9 Euros. Again, restricting the comparison to the matched counterparts, differences remain mostly significant and amount to roughly 3 Euros.
As has been mentioned, although we control for important firm characteristics, selection on the firm's side might still be an issue. Thus, the entire analysis has also been replicated for individuals taking up a job in a firm that has hired at least one subsidized and one unsubsidized worker. As has been discussed in Sect. 4, this step controls for unobserved firm heterogeneity, but might induce unobserved heterogeneity on the workers side. Mean wages of newly hired workers are generally lower within this group of firms than in the full sample, and in particular they are lower for workers hired without a supporting subsidy. The main results of this step are presented in Table 3 (descriptive results) and 4 (matching results) in the Appendix. Before matching, subsidized workers within these firms seems to experience significant positive wage gains. But again, differences in daily wages do not remain significant after the matching took place, and we find wage gains for subsidized workers during the 3.5 years after taking up the job, when we assume zero wages for days without regular employment.
For robustness checks (that can be found in Table O.2–O.4 in the electronic supplementary material), all estimates have also been conducted for individuals who did not enter any (other) labor market program during their unemployment spell. Results are very similar to those presented above (effects on cumulated wages are slightly smaller). Furthermore, we separately repeated the estimates for subsidies directed towards training requirements and subsidies for hard-to-place workers. As could have been expected, average daily wages are lower – by up to 10 Euros – for individuals receiving a subsidy for hard-to-place workers than for those receiving one for training requirements. While their average employment shares over time are also lower, the difference in employment shares compared to a matched comparison group is higher, which indicates a higher effectiveness of the program for individuals with more severe obstacles to reintegration into the labor market. Regarding wage differences between subsidized and similar unsubsidized workers, we find again nearly no significant differences after matching for both variants of the subsidy.
Finally, although this is not the main topic of our paper, a simple fiscal cost-benefit analysis for subsidized workers is presented in Appendix 2. This enables us to get a very rough impression of the efficiency of the subsidy. While the findings should be interpreted with care, they indicate that wage subsidies – because of on average higher subsequent employment shares of participants – might be self-financing over the longer run if adverse indirect effects (depicted in detail in the Appendix) are not too large.
For Germany, this paper investigates a sample of new hires during the second quarter of 2003 and asks how subsequent wages differ between workers who took up a subsidized or unsubsidized job, respectively. The most important wage subsidy programs in the time period under consideration granted time-limited supplements to firms that hired hard-to-place workers or hired workers into jobs with particular training requirements. Within the legal framework, the size and duration of these subsidies were negotiated between caseworkers and firms. To present first results on the wages of workers supported by such a subsidy, we use a large process-generated data set, providing information on individual, regional and firm characteristics as well as on wage rates received during a previous period. We compare their wages with those of unsubsidized workers. In a first step, to account as far as possible for observed heterogeneity, we selected a comparison group by means of a propensity score matching. In a second step, to cancel out time-constant individual heterogeneity, we combined this with a difference-in-differences approach, focusing on the wage development of individual workers before and after taking up the new job.
As a first main result of the study, we find no significant wage differences between subsidized and similar unsubsidized workers, and the difference in individual wage changes is mostly insignificant as well. Thus for Germany, our study does not obtain evidence of rent-sharing between workers and firms to exploit the schemes under consideration, or for comparatively low wages in subsidized jobs. These results differ from those obtained in studies of North American wage subsidy schemes. It seems that wage effects of wage subsidies seem to hinge crucially on the design of the subsidy scheme and on the institutional setting. Our main explanation for similar short-run wages of subsidized and unsubsidized workers is that the German system of wage setting is shaped by collective contracts and an attachment of wages to jobs rather than to individual abilities: The ubiquity of collective contracts implies that lower or higher wages for subsidized workers than for unsubsidized workers within similar jobs and within the same firm might first not be feasible (if the firm is covered by a collective contract and the worker is unionized) and second and even more important, be assessed as not acceptable or unfair, respectively, by workers, firms' management and also by caseworkers. This should hold in particular regarding wage-undercutting because subsidized jobs are on average rather low-wage jobs. Furthermore, the German scheme did not involve vouchers, which might have helped to avoid stigma effects.
As a second main result of the study, initially subsidized workers subsequently have higher employment rates, resulting in significantly higher cumulated wages during the time frame investigated. If we aggregate these higher wages due to higher employment rates over the observation period of 3.5 years, additional earnings of subsidized workers sum up to around 2,200 Euros (women in West Germany) to 5,000 Euros (men in East Germany). The fact that firms might have to reimburse part of the subsidy if they dismiss workers during the “protection period,” might contribute to the higher employment shares of previously subsidized workers and thus to higher cumulated wages in the longer run. In a number of cases, these time periods seem to have been sufficiently long to close productivity gaps (or invalidate prejudices) that might have been existent when taking up the job.
While these results are plausible, several caveats of the analysis have to be kept in mind, in particular regarding cumulated wage effects: First, the comparison with unsubsidized workers ignores the importance of the subsidy for hiring decisions, but interprets subsequently higher employment shares of previously subsidized workers as a causal effect of subsidization (or of the associated “protection period”). While we have compared wages of similar workers within roughly similar firms, an important issue is certainly to analyze the importance of the selection process of subsidized workers into particular firms in more detail. Firms with on average high tenure – that are confident that workers survive the “protection period,” which is associated with subsidization – are probably more likely to hire subsidized workers. Regrettably, we have no precise information on the latter variable. Second, the methods applied in this paper do not identify potential indirect effects of subsidization, such as displacement and substitution as well as effects on reservation wages; this would require a macro-analysis on the regional level. Finally, our study is restricted to program entries during the second quarter of 2003. Thus, another line for future research would be to analyze entries from a longer period of calendar time.
In Deutschland können Unternehmen, die Personen mit Vermittlungshemmnissen einstellen, für einen begrenzten Zeitraum einen Eingliederungszuschuss zum Arbeitsentgelt erhalten. Dieser Beitrag untersucht die Einkommens- und Beschäftigungsentwicklung von vormals Arbeitslosen, die im 2. Quartal 2003 aus Arbeitslosigkeit heraus eine Beschäftigung aufnahmen, um zu überprüfen, inwieweit die Arbeitseinkommen gefördert und ungefördert eingestellter Personen differieren. Die Gruppe der Geförderten umfasst dabei Personen, die mit dem damaligen Eingliederungszuschuss bei Einarbeitung oder aber bei erschwerter Vermittlung gefördert wurden. Die Höhe und Dauer der Zuschüsse liegt – im Rahmen der gesetzlichen Vorgaben – im Ermessen der Arbeitsvermittler; sie sind typischerweise das Ergebnis eines Verhandlungsprozesses zwischen diesen und den einstellenden Unternehmen.
Die Studie basiert auf administrativen Daten der Bundesagentur für Arbeit, die Informationen über individuelle, regionale und firmenbezogene Merkmale enthalten. In einem ersten Schritt werden die Löhne anfänglich geförderter Arbeitnehmer mit denen ähnlicher ungeförderter Personen verglichen, wobei die Vergleichsgruppe mithilfe statistischer Matching-Verfahren ausgewählt wird. Um zudem für zeitkonstante unbeobachtbare Heterogenität zu kontrollieren, werden im zweiten Schritt die Lohnentwicklungen der beiden Gruppen vor und nach der Aufnahme des neuen Arbeitsplatzes verglichen, also Matching-Methoden mit einer Differenzen-von-Differenzen-Strategie kombiniert.
Ein erstes Ergebnis der Untersuchung ist, dass sich die Löhne gefördert und ungefördert eingestellter Personen kurzfristig nicht unterscheiden; dasselbe gilt für die Lohnentwicklung. Damit lässt sich für Deutschland weder Evidenz dafür finden, dass sich Unternehmen und Arbeitnehmer mögliche „Renten“ aus Lohnsubventionen teilen, noch dafür, dass geförderte Arbeitnehmer durch die Förderung „stigmatisiert“ werden. Studien für Nordamerika kamen teilweise zu entsprechenden Schlussfolgerungen. Dies weist darauf hin, dass die Effekte einer Förderung von deren konkreter Ausgestaltung und dem institutionellen Kontext abhängen. Eine Erklärung für die kurzfristig ähnlichen Löhne geförderter und ungeförderter Arbeitnehmer in Deutschland könnte die hohe Bedeutung kollektiver Verhandlungen für die Lohnfindung sein, bei denen das Arbeitsentgelt eher an den Arbeitsplatz bzw. die Leistungsgruppe als an die konkrete Person gebunden ist. Höhere oder geringere Arbeitsentgelte anfänglich geförderter Arbeitnehmer könnten daher erstens nicht durchsetzbar sein (wenn das Unternehmen einen Tarifvertrag anwendet) und zweitens von Arbeitnehmern, Firmen und Vermittlern als unakzeptabel oder unfair eingeschätzt werden. Dies dürfte umso mehr gelten, als die geförderten Personen vor allem Tätigkeiten im Niedriglohnbereich aufgenommen haben. Weiterhin wurden die Eingliederungszuschüsse nicht auf Gutscheinbasis gewährt, was dazu beitragen dürfte, Stigmaeffekte zu vermeiden.
Ein zweites Ergebnis der Studie ist, dass anfänglich geförderte Arbeitnehmer in der Folge signifikant mehr Tage in Beschäftigung waren, was sich entsprechend in höheren kumulierten Arbeitseinkommen auswirkte. Aggregiert über den Beobachtungszeitraum von 3,5 Jahren betrugen die zusätzlichen Einkünfte etwa 2.200 (Frauen in Westdeutschland) bis 5.000 Euro (Männer in Ostdeutschland). Die höheren Beschäftigungsanteile der Geförderten und die damit einhergehenden höheren kumulierten Einkommen könnten mit einer Besonderheit der Ausgestaltung von Eingliederungszuschüssen zusammenhängen: Wenn der Arbeitgeber einen geförderten Arbeitnehmer während der Förderung oder einer noch einmal so langen Nachbeschäftigungszeit kündigt – ohne dass hierfür dringende betriebliche Erfordernisse vorliegen – kann er zur teilweisen Rückzahlung der erhaltenen Zuschüsse verpflichtet werden. Diese Zeitperioden scheinen vergleichsweise oft ausgereicht zu haben, damit anfänglich geförderte Arbeitnehmer vorhandene Produktivitätsdefizite (bzw. Unsicherheiten über ihre Produktivität) abbauen konnten.
Während die Ergebnisse plausibel sind, sind einige Einschränkungen zu machen, die sich insbesondere auf die Wirkungen der Förderung auf die kumulierten Einkünfte beziehen: Erstens ignoriert der hier gewählte Ansatz, dass die Gewährung eines Zuschusses bereits einen Effekt auf die Einstellungsentscheidung haben dürfte, interpretiert aber die höheren Beschäftigungsanteile der Geförderten im Vergleich zu ungefördert einstellten Personen als Folge der Förderung (oder ihrer Ausgestaltung). Während dabei die Löhne ähnlicher Personen in ähnlichen Unternehmen verglichen wurden, sollte der Selektionsprozess von Arbeitnehmer in Firmen in Zukunft noch genauer untersucht werden. Insbesondere Firmen, in denen die durchschnittliche Betriebszugehörigkeitsdauer vergleichsweise lange ist, dürften eher davon ausgehen, dass ein geförderter Arbeitnehmer auch mindestens bis zum Ende der Nachbeschäftigungsfrist im Unternehmen verbleibt. Zweitens sind die in dem Beitrag angewendeten Methoden nicht geeignet, mögliche indirekte Effekte der Förderung (wie Mitnahmeeffekte, Verdrängungs- und Substitutionseffekte sowie mögliche Wirkungen auf die Reservationslöhne) zu identifizieren. Hierzu wäre eine Makroanalyse auf dem regionalen Niveau erforderlich. Schließlich beschränkt sich die Studie auf Zugänge in Beschäftigung während des 2. Quartals 2003. Weitere Auswertungen sollten prüfen, ob die Wirkungen einer Förderung auch für andere Zugangszeiträume ähnlich ausfallen.