Did Customers Benefit from the Reorganisation of Customer Management in German Employment Agencies?

Abstract

As a response to an overall high and persistent unemployment rate during the 1990s and the beginning of the new millennium, the German Federal Employment Agency underwent several reforms. One of the most important reforms, the reform of the organisational structure of the Federal Employment Agency, comprised an adjustment of the business model and a reorganisation of placement processes. From 2004 onwards, customer service centres (CSC) and standardised action programmes for different groups of customers were implemented in all German employment agencies, aiming at an improvement of quality and speed in the placement process. By handling customers faster (customer service centres) and activating/supporting them better (action programmes), a higher number of placements into employment should be observed, thus leading to a reduction of unemployment. By taking advantage of the staggered implementation of the customer service centres and action programmes by region, the effects on employment rates are estimated. The dynamic difference-in-differences approach employed takes into account the time under treatment. The results suggest that the introduction of the customer service centres led to an increase in both, employment inflows and overall employment, while most of the action programmes had a negative impact on both.