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The Effect of the Hartz Reform on Unemployment Duration and Post-Unemployment Outcomes. A Difference-in-Differences Approach

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  • Bruno Amable

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CEPREMAP - Centre pour la recherche économique et ses applications - Centre pour la recherche économique et ses applications, IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)

  • Baptiste Françon

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

Abstract

In this paper, we investigate the microeconomic effects of one major feature of the German Hartz Reforms (2003-2005), namely the reduction in compensation duration for older unemployed above 45 years of age. We look at two potential effects of this measure: on job take-up rates, but also on post-unemployment outcomes, through various indicators of matching quality (job stability, skill adequacy) and job quality (type of job contract). Applying difference-in-differences estimators, we show that the effects of this specific feature were rather scant. Regarding unemployment duration, only unemployed within a specific age group (55 to 59 years old) were affected by the reform. Evidence suggests that this is because they previously used unemployment schemes as a bridge to early retirement. In addition, there is some evidence of detrimental effects on job or matching quality.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00973884.

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Date of creation: Mar 2014
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Handle: RePEc:hal:cesptp:halshs-00973884

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Keywords: Unemployment benefits; unemployment duration; job matching; job quality; early retirement; difference-in-differences;

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  1. Konstantinos Tatsiramos, 2009. "Unemployment Insurance in Europe: Unemployment Duration and Subsequent Employment Stability," Journal of the European Economic Association, MIT Press, MIT Press, vol. 7(6), pages 1225-1260, December.
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  14. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(5), pages 972-90, October.
  15. Jan Goebel & Maria Richter, 2007. "Nach der Einführung von Arbeitslosengeld II: deutlich mehr Verlierer als Gewinner unter den Hilfeempfängern," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 74(50), pages 753-761.
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