Labour market policies in transition: Lessons from East Germany

This article analyses and evaluates all types of active and passive labour market policies which have been pursued in East Germany during its transition from a centrally planned to a market economy. To this end, the article makes full use of the numerous, mostly German studies which have been carried out over the past years and which each mostly analysed only one type of labour market policy. The article shows that several of these labour market policy programmes did not improve the participants' position on the labour market; frequently, they even worsened it. In addition, most types of labour market policies had negative side-effects on non-participating unemployed as well as on regular employees. Based on this outcome, the article also draws fundamental policy conclusions.