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Should Welfare Administration be Centralized or Decentralized? Evidence from a Policy Experiment

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Abstract

The 2005 reform of the German welfare system introduced two competing organizational models for welfare administration. In most districts, a centralized organization was established where local welfare agencies are bound to central directives. At the same time, 69 districts were allowed to opt for a decentralized organization. We evaluate the relative success of both types of organizations. Compared to centralized organization, decentralized organization of welfare administration has a negative effect on the transition of male welfare recipients to self-sufficient employment, but it does not affect employment in combination with continuing welfare support. No significant effects were found for women.

Suggested Citation

  • Bernhard Boockmann & Stephan L. Thomsen & Thomas Walter & Christian Göbel & Martin Huber, 2010. "Should Welfare Administration be Centralized or Decentralized? Evidence from a Policy Experiment," IAW Discussion Papers 69, Institut für Angewandte Wirtschaftsforschung (IAW).
    • Handle: RePEc:iaw:iawdip:69
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    1. W. Eichhorst & M. Grienberger-Zingerle & R. Konle-Seidl, 2008. "Activation Policies in Germany: From Status Protection to Basic Income Support," Springer Books, in: Werner Eichhorst & Otto Kaufmann & Regina Konle-Seidl (ed.), Bringing the Jobless into Work?, pages 17-67, Springer.
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    1. Jeremias Nieminen & Ohto Kanninen & Hannu Karhunen, 2023. "The decentralization of public employment services and local governments’ responses to incentives," Journal of Economic Geography, Oxford University Press, vol. 23(6), pages 1371-1395.
    2. Ohto Kanninen & Hannu Karhunen & Jeremias Nieminen, "undated". "Effect of Secondary Education on Cognitive and Non-cognitive Skills," Working Papers 337, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    3. Oliver Falck & Siegfried Schönherr, 2016. "An Economic Reform Agenda for Croatia: a comprehensive economic reform package prepared for the Croatian Statehood Foundation," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 70, September.
    4. Mergele, Lukas & Weber, Michael, 2020. "Public employment services under decentralization: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 182(C).
    5. Lukas Mergele & Michael Weber & Michael Weber, 2020. "Jobcenter: Optionskommunen vermitteln Arbeitslose seltener in Beschäftigung," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(02), pages 39-44, February.
    6. Michael Weber, 2016. "The short-run and long-run effects of decentralizing public employment services," ifo Working Paper Series 209, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Holzner, Christian & Munz, Sonja, 2013. "Should local public employment services be merged with local social benefit administrations?," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 46(2), pages 83-102.
    8. Mergele, Lukas & Weber, Michael, 2020. "Public employment services under decentralization: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 182(C).
    9. Regina T. Riphahn & Christoph Wunder, 2016. "State dependence in welfare receipt: transitions before and after a reform," Empirical Economics, Springer, vol. 50(4), pages 1303-1329, June.
    10. Lukas Mergele, 2016. "Are there gains from decentralizing public employment offices?," Working Papers 2015020, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    11. Wolfgang Nagl & Michael Weber, 2016. "Stuck in a trap? Long-term unemployment under two-tier unemployment compensation schemes," ifo Working Paper Series 231, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    12. Ohto Kanninen & Hannu Karhunen & Jeremias Nieminen, 2021. "Behavior and Effectiveness of Decentralized Employment Offices," Working Papers 332, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.

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    More about this item

    Keywords

    Welfare System; Organization; Decentralization; Labor Market Integration;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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