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Income Support Systems, Labor Market Policies and Labor Supply: The German Experience

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  • Caliendo, Marco

    ()
    (University of Potsdam)

Abstract

In view of the demographic trends, most EU countries face the problem of a declining work force in the future. Understanding the interaction between income support systems (such as unemployment benefits, social assistance, early retirement and pension systems) and total labor supply is of crucial importance to combat problems and ensure economic growth in the future. The German labor market has been plagued by high and persistent unemployment in the last two decades in combination with a relatively low labor force participation of women. This created a situation where labor market reforms were unavoidable. The speed and depth of the reforms are remarkable, mainly aimed at activating people by increasing their incentives to take up work. The aim of this paper is to give a brief overview of the German income support systems and labor market polices, their recent reforms and – where already possible – effects of these reforms. Overall, Germany seems to be on the right track. The recent reforms helped to tackle some labor market problems but also created high political unrest. It remains to be seen how future governments react to worsened economic conditions in light of these experiences.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4665.

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Length: 37 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4665

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Keywords: labor force participation; labor supply; unemployment; benefit systems; public policy;

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Citations

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Cited by:
  1. Caliendo, Marco & Künn, Steffen, 2010. "Start-Up Subsidies for the Unemployed: Long-Term Evidence and Effect Heterogeneity," IZA Discussion Papers 4790, Institute for the Study of Labor (IZA).
  2. Forslund, Anders & Fredriksson, Peter, 2009. "Income support systems, labour supply incentives and employment – some cross-country evidence," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2009:32, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  3. Mosthaf, Alexander, 2011. "Low-wage jobs - stepping stones or just bad signals?," IAB Discussion Paper 201111, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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