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Public Employment Agency Reform, Matching Efficiency, and German Unemployment

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  • Merkl, Christian

    (University of Erlangen-Nuremberg)

  • Sauerbier, Timo

    (FAU, Erlangen Nuremberg)

Abstract

Our paper analyzes the role of public employment agencies in job matching, in particular the effects of the restructuring of the Federal Employment Agency in Germany (Hartz III labor market reform) for aggregate matching and unemployment. Based on two microeconomic datasets, we show that the market share of the Federal Employment Agency as job intermediary declined after the Hartz-reforms. We propose a macroeconomic model of the labor market with a private and a public search channel and fit the model to various dimensions of the data. We show that direct intermediation activities of the Federal Employment Agency did not contribute to the decline of unemployment in Germany. By contrast, improved activation of unemployed workers reduced unemployed by 0.8 percentage points. Through the lens of an aggregate matching function, more activation is associated with a larger matching efficiency.

Suggested Citation

  • Merkl, Christian & Sauerbier, Timo, 2022. "Public Employment Agency Reform, Matching Efficiency, and German Unemployment," IZA Discussion Papers 15714, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15714
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    Cited by:

    1. Peltonen, Juho, 2023. "Short-time work in search and matching models: Evidence from Germany during the Covid-19 crisis," MPRA Paper 119238, University Library of Munich, Germany.

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    More about this item

    Keywords

    Hartz reforms; search and matching; reform of employment agency;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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