Dr. Nicolas Echarti

Employment Effects of Vocational Rehabilitation in Germany: A Quantitative Analysis

Year: 2019

Esther Schuring & Prof. Cathal O'Donoghue


This thesis describes the employment effects of vocational rehabilitation measures in Germany, which were investigated through a series of quasi-experiments. In the absence of randomization, internal comparison groups were used to compare outcomes with and without completion of vocational re-training measures and across different treatment alternatives.

First, the extent to which individual-level socio-economic factors influenced employment outcomes after vocational rehabilitation was investigated. Among the different factors tested, personal employment and income history were the strongest predictors. Additionally, other factors, such as the rehabilitants’ age, prior education level or work environment were found to have a strong impact.

Second, the research examined to what extent completing a vocational re-training influenced employment outcomes over the eight years after program admission. The main result of this analysis was that vocational re-training greatly improved the employment status of the rehabilitants, i.e., the programs led to significantly more days in employment and significantly higher accumulative income. At the same time, completing a re-training program reduced the number of days on unemployment and other social security benefits and the likelihood of receiving a pension due to reduced earnings capacity.

Third, the question of the optimal duration of re-training was assessed. The direct comparison showed that, in the long term, the employment effects associated with the traditional, two-year re-training programs are larger than those of partial, one-year re-training programs.

Lastly, the vocational re-training costs and benefits to social security providers were compared to evaluate the cost-effectiveness and efficiency of vocational re-training. The estimated financial balance sheets showed that both one-year and two-year vocational re-training are cost-effective; however, the payback period of one-year re-training is shorter.

Selected publications by Nicolas Echarti