The Effects of Reforming a Federal Employment Agency on Labor Demand

In this paper we report the results of an empirical study on employment growth effects a policy intervention, explicitly aimed at increasing placement efficiency Federal Employment Agency in Germany. We use Hartz III reform year 2004 as exogenous intervention that improves matching process and compare establishments services with do not services. Using detailed German establishment level data, our difference-in-differences estimates reveal increase among those firms agency for their recruitment activities compared to non-user firms. After was place, using grew roughly two percentage points faster terms relative non-users achieve proportion hires. provide several robustness tests using, example, inverse-probability weighting additionally account differences observable characteristics. Our highlights importance service labor demand side, particular so far overlooked level.