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In January 2005, the German government enacted a substantial reform of the welfare system, the so-called Hartz IV reform. This book evaluates key characteristics of the reform from a microeconometric perspective. It investigates whether a centralized or decentralized organization of welfare administration is more successful to integrate welfare recipients into employment. Moreover, it analyzes the employment effects of an intensified use of benefit sanctions and evaluates the effectiveness and efficiency of the most frequently assigned Active Labor Market Programs. The analyses focus on immigrants, who are highly over-represented in the German welfare system.