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(Spillover) Effects of Labour Market Reforms in Germany and France

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  • Claudia Busl
  • Atilim Seymen

Abstract

In this paper we analyze the (potential) effects of labour market and fiscal policy reforms by heterogeneous European countries—Germany and France—on the domestic and foreign economy. We test the implications of the gains in matching efficiency and reduced unemployment benefits induced by the German Hartz reforms in a two-country RBC model with frictions in the labour market, which replicates the data quite well. We then explore the reform possibilities in the French labour market and their potential (inter)national effects by calibrating the model to recent data. Both home and foreign economies benefit from labour market reforms in the home economy in our framework.

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Bibliographic Info

Paper provided by WWWforEurope in its series WWWforEurope Working Papers series with number 8.

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Length: 58
Date of creation: Jun 2013
Date of revision:
Publication status: published
Handle: RePEc:feu:wfewop:y:2013:m:6:d:0:i:8

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Postal: WWWforEurope Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
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Keywords: Labour market reforms; search and matching; dynamic stochastic general equilibrium models;

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References

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  1. George Alessandria & Alain Delacroix, 2004. "Trade and the (dis)incentive to reform labor markets: the case of reform in the European Union," Working Papers 04-18, Federal Reserve Bank of Philadelphia.
  2. Jan Hogrefe & Marcus Kappler, 2013. "The labour share of income: heterogeneous causes for parallel movements?," Journal of Economic Inequality, Springer, vol. 11(3), pages 303-319, September.
  3. Krebs, Tom & Scheffel, Martin, 2012. "Macroeconomic Evaluation of Labor Market Reform in Germany," Working Papers 12-23, University of Mannheim, Department of Economics.
  4. Hertweck, Matthias Sebastian & Sigrist, Oliver, 2013. "The Aggregate Effects of the Hartz Reforms in Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79942, Verein für Socialpolitik / German Economic Association.
  5. Felbermayr, Gabriel & Larch, Mario & Lechthaler, Wolfgang, 2012. "Labour market reforms in a globalised world," Munich Reprints in Economics 20599, University of Munich, Department of Economics.
  6. Krause, Michael U. & Uhlig, Harald, 2011. "Transitions in the German labor market: Structure and crisis," Discussion Paper Series 1: Economic Studies 2011,34, Deutsche Bundesbank, Research Centre.
  7. Raquel FONSECA & Lise PATUREAU & Thepthida SOPRASEUTH, 2009. "Divergence in Labor Market Institutions and International Business Cycles," Annales d'Economie et de Statistique, ENSAE, issue 95-96, pages 279-314.
  8. Campolmi, Alessia & Faia, Ester, 2011. "Labor market institutions and inflation volatility in the euro area," Journal of Economic Dynamics and Control, Elsevier, vol. 35(5), pages 793-812, May.
  9. Raj Chetty & Adam Guren & Day Manoli & Andrea Weber, 2011. "Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins," American Economic Review, American Economic Association, vol. 101(3), pages 471-75, May.
  10. René Fahr & Uwe Sunde, 2009. "Did the Hartz Reforms Speed-Up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions," German Economic Review, Verein für Socialpolitik, vol. 10, pages 284-316, 08.
  11. Faia, Ester & Lechthaler, Wolfgang & Merkl, Christian, 2013. "Fiscal stimulus and labor market policies in Europe," Journal of Economic Dynamics and Control, Elsevier, vol. 37(3), pages 483-499.
  12. Patureau, Lise, 2007. "Pricing-to-market, limited participation and exchange rate dynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 31(10), pages 3281-3320, October.
  13. Gabriel J. Felbermayr & Mario Larch & Wolfgang Lechthaler, 2012. "The Shimer-Puzzle of International Trade: A Quantitative Analysis," Ifo Working Paper Series Ifo Working Paper No. 134, Ifo Institute for Economic Research at the University of Munich.
  14. William Nickell, 2006. "The CEP-OECD Institutions Data Set (1960-2004)," CEP Discussion Papers dp0759, Centre for Economic Performance, LSE.
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Cited by:
  1. Kurt Kratena & Mark Sommer, 2014. "Labour Market Policy and Environmental Fiscal Devaluation: A Cure for Spain in the Aftermath of the Great Recession?," WIFO Working Papers 476, WIFO.
  2. Karl Aiginger & Kurt Kratena & Margit Schratzenstaller & Teresa Weiss, 2014. "Moving towards a new growth model," WWWforEurope Deliverables series 3, WWWforEurope.

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