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Fixing the leak: unemployment incidence before and after the 2006 reform of unemployment benefits in Germany

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  • Dlugosz, Stephan
  • Stephan, Gesine
  • Wilke, Ralf A.

Abstract

From 2002-2004, the German government passed several laws that curtailed the generosity of the unemployment compensation system. One of the most ambitious changes was a considerable reduction in unemployment benefit entitlement lengths for older unemployed, which was effective during 2006 and 2007. We apply a difference-in-differences approach to show that the highly disputed reform induced a considerable decline in unemployment incidence among older workers. It thus sealed an important leak in the unemployment insurance system. Furthermore, we find a strong anticipation effect; unemployment entries of elderly workers peaked during the months preceding the reform. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 09-079.

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Date of creation: 2009
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Handle: RePEc:zbw:zewdip:09079

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Keywords: unemployment incidence; policy evaluation; administrative data;

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  1. Lalive, Rafael, 2008. "How do extended benefits affect unemployment duration A regression discontinuity approach," Journal of Econometrics, Elsevier, Elsevier, vol. 142(2), pages 785-806, February.
  2. John T. Addison & Pedro Portugal, 2007. "How Do Different Entitlements to Unemployment Benefits Affect the Transitions from Unemployment into Employment?," Working Papers, Banco de Portugal, Economics and Research Department w200711, Banco de Portugal, Economics and Research Department.
  3. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, Econometric Society, vol. 69(1), pages 201-09, January.
  4. Hennighausen, Tanja & Bischoff, Ivo & Heinemann, Friedrich, 2009. "Choosing from the Reform Menu Card: Individual Determinants of Labour Market Policy Preferences," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 09-004, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Puhani, Patrick A., 2012. "The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models," Economics Letters, Elsevier, Elsevier, vol. 115(1), pages 85-87.
  6. Melanie Arntz & Ralf Wilke, 2009. "Unemployment Duration in Germany: Individual and Regional Determinants of Local Job Finding, Migration and Subsidized Employment," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 43(1), pages 43-61.
  7. Knut Gerlach & David Levine & Gesine Stephan & Olaf Struck, 2008. "Fairness and the employment contract: North American regions versus Germany," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 32(3), pages 421-439, May.
  8. Arnds, Pascal & Bonin, Holger, 2002. "Frühverrentung in Deutschland: Ökonomische Anreize und institutionelle Strukturen," IZA Discussion Papers 666, Institute for the Study of Labor (IZA).
  9. Rafael Lalive, 2007. "Unemployment Benefits, Unemployment Duration, and Post-Unemployment Jobs: A Regression Discontinuity Approach," American Economic Review, American Economic Association, American Economic Association, vol. 97(2), pages 108-112, May.
  10. Elke J. Jahn, 2009. "Do firms obey the law when they fire workers? Social criteria and severance payments in Germany," International Journal of Manpower, Emerald Group Publishing, Emerald Group Publishing, vol. 30(7), pages 672-691, November.
  11. Winter-Ebmer, Rudolf, 2003. "Benefit duration and unemployment entry: A quasi-experiment in Austria," European Economic Review, Elsevier, Elsevier, vol. 47(2), pages 259-273, April.
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Citations

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Cited by:
  1. Bruno Amable & Baptiste Françon, 2014. "The Effect of the Hartz Reform on Unemployment Duration and Post-Unemployment Outcomes. A Difference-in-Differences Approach," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 14020, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  2. Dietz, Martin & Walwei, Ulrich, 2011. "Germany - no country for old workers?," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(4), pages 363-376.
  3. Tominey, Emma, 2013. "Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock," IZA Discussion Papers 7462, Institute for the Study of Labor (IZA).
  4. Boockmann, Bernhard & Fries, Jan & Göbel, Christian, 2012. "Specific measures for older employees and late career employment," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 12-059, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Hanel, Barbara, 2012. "The effect of disability pension incentives on early retirement decisions," Labour Economics, Elsevier, Elsevier, vol. 19(4), pages 595-607.
  6. Barbara Hanel, 2010. "Disability Pensions and Labor Supply," Working Papers, Bavarian Graduate Program in Economics (BGPE) 086, Bavarian Graduate Program in Economics (BGPE).
  7. Goerke Laszlo & Pannenberg Markus, 2011. "'Take It or Go to Court': The Impact of Sec. 1a of the German Protection Against Dismissal Act on Severance Payments," Review of Law & Economics, De Gruyter, De Gruyter, vol. 7(2), pages 377-404, December.
  8. Emma Tominey, 2013. "Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock," Working Papers, Human Capital and Economic Opportunity Working Group 2013-016, Human Capital and Economic Opportunity Working Group.
  9. Kloß, Michael & Nagl, Wolfgang, 2013. "Unemployment compensation and unemployment duration - Evidence from the German Hartz IV reform," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79711, Verein für Socialpolitik / German Economic Association.
  10. Lo, Simon M.S. & Stephan, Gesine & Wilke, Ralf, 2012. "Estimating the Latent Effect of Unemployment Benefits on Unemployment Duration," IZA Discussion Papers 6650, Institute for the Study of Labor (IZA).

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