In a new discussion paper, Li Kathrin Rupieper and Stephan Thomsen evaluate the effects of courses provided by Volkshochschulen (VHS) on unemployment in a county-level analysis of East Germany between 1991 and 2002. After the German Reunification in 1990, East Germany transitioned from a centrally planned economic system to a market economy. At the time, upskilling through adult education was deemed essential for the successful integration of the workforce into the labor market. Besides substantial mandatory training programs provided by active labor market policies, VHS were the most important providers of voluntary adult education. The economic effects of their courses have not been analyzed so far.
The study at hand combines comprehensive data on the activities of VHS and newly digitized labour market data. The identification strategy exploits the decentralized expansion of courses, which led to substantial and quasi-random variation in course numbers. The empirical results show no evidence that VHS courses harmed labor market integration, in contrast to some active labor market policies. Courses did not affect subsequent unemployment on average. Yet, in counties neighboring West Germany, courses reduced unemployment. Low labor demand may have restricted the realization of education effects. As both work-related and purely recreational courses reduced unemployment in counties bordering West Germany, the results also hint towards the relevance of social capital for successful labor market integration.
