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How Weather-Proof is the Construction Sector? Empirical Evidence from Germany

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  • Wilke, Ralf A.
  • Arntz, Melanie

Abstract

With the purpose to reduce winter unemployment and to promote all-season employment in the constructions sector, Germany maintains an extensive bad weather allowance system. Since the mid 1990s, these regulations have been subject to several reforms that resemble the range of approaches for employment promotion which can be found in other European countries. We analyse the effect of these reforms on individual unemployment risks using large individual administrative data merged with information about local weather conditions and the business cycle. We find a weaker direct link between seasonal layoffs and actual weather than broadly assumed, since most of the layoffs take place at fixed dates. The reforms under consideration have economically plausible effects; Regulations that limit an employer's financial burden reduce transitions to unemployment and render it less weather-dependent. --

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-105.

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Date of creation: 2008
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Handle: RePEc:zbw:zewdip:7479

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Keywords: panel data; temporary layoffs; employment stability;

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  1. Roed, Knut & Nordberg, Morten, 2003. "Temporary layoffs and the duration of unemployment," Labour Economics, Elsevier, vol. 10(3), pages 381-398, June.
  2. Burdett, Kenneth & Wright, Randall, 1989. "Optimal firm size, taxes, and unemployment," Journal of Public Economics, Elsevier, vol. 39(3), pages 275-287, August.
  3. Wilke, Ralf A., 2004. "New Estimates of the Duration and Risk of Unemployment for West-Germany," ZEW Discussion Papers 04-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-57, October.
  5. Solomou, S. & Wu, W., 1997. "The Impact of Weather on the Construction Sector Output Variations, 1955-1989," Cambridge Working Papers in Economics 9722, Faculty of Economics, University of Cambridge.
  6. Grady, Patrick & Kapsalis, Constantine, 2002. "The Approach to Seasonal Unemployment in the Nordic Countries: A Comparison with Canada," MPRA Paper 2991, University Library of Munich, Germany.
  7. Mavromaras, Kostas G & Rudolph, Helmut, 1998. "Temporary Separations and Firm Size in the German Labour Market," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(2), pages 215-25, May.
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