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GDP-employment decoupling in Germany

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  • Klinger, Sabine
  • Weber, Enzo

Abstract

This paper investigates the time-varying relationship between German output and employment growth, in particular their decoupling in recent years. We estimate a correlated unobserved components model that allows for persistent and cyclical time variation in the employment-GDP linkage as well as an additional employment component beyond the one linked to GDP. Controlling for the latter yields a more precise classification of what is a jobless recovery or a labour hoarding recession. We find that the comovement of employment and GDP has loosened permanently since the Great Recession while the comovement with other variables than GDP has become tighter. The decoupling goes hand in hand with the change of the sectoral composition of the economy, especially the rise of the service sector. Beyond that, high labour market tightness and at the same time high labour supply carried recent employment growth. The industry mix, wages and working time had a smaller influence.

Suggested Citation

  • Klinger, Sabine & Weber, Enzo, 2020. "GDP-employment decoupling in Germany," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 82-98.
    • Handle: RePEc:eee:streco:v:52:y:2020:i:c:p:82-98
    DOI: 10.1016/j.strueco.2019.10.003
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    3. Bauer, Anja & Fuchs, Johann & Gartner, Hermann & Hummel, Markus & Hutter, Christian & Wanger, Susanne & Weber, Enzo & Zika, Gerd, 2020. "IAB-Prognose 2020/2021: Arbeitsmarkt auf schwierigem Erholungskurs," IAB-Kurzbericht 202019, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Fuchs, Johann & Gartner, Hermann & Hellwagner, Timon & Hummel, Markus & Hutter, Christian & Wanger, Susanne & Weber, Enzo & Zika, Gerd, 2021. "IAB-Prognose 2021/2022: Arbeitsmarkt auf Erholungskurs," IAB-Kurzbericht 202120, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Weiske, Sebastian, 2020. "Die Folgen der Industrieschwäche für die Binnenwirtschaft," Working Papers 04/2020, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
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    14. Bauer, Anja & Fuchs, Johann & Gartner, Hermann & Hummel, Markus & Hutter, Christian & Wanger, Susanne & Weber, Enzo & Zika, Gerd, 2021. "IAB-Prognose: Arbeitsmarkt auf dem Weg aus der Krise," IAB-Kurzbericht 202106, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Niels Gillmann & Andreas Maas & Antje Weyh, 2023. "Berufliche Mobilität vor und während der Corona-Pandemie," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 30(01), pages 03-10, February.
    16. Christian Hutter, 2021. "Cyclicality of labour market search: a new big data approach," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 55(1), pages 1-16, December.
    17. Rossen, Anja & Roth, Duncan & Wapler, Rüdiger & Weyh, Antje, 2020. "Regionale Arbeitsmarktprognosen 2020/2021: Der Arbeitsmarkt erholt sich von der Corona-Krise regional sehr unterschiedlich (Labour Market Forecasts 2020/2021: Regional labour markets expected to recov," IAB-Kurzbericht 202020, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    18. Wyrwich, Michael & Steinberg, Philip J. & Noseleit, Florian & de Faria, Pedro, 2022. "Is open innovation imprinted on new ventures? The cooperation-inhibiting legacy of authoritarian regimes," Research Policy, Elsevier, vol. 51(1).
    19. Chao Wu & Yu Hua, 2023. "Does Environmental Regulation Have an Employment Dividend? Evidence from China," Sustainability, MDPI, vol. 15(7), pages 1-20, April.
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    24. Schulhof, Vera & van Vuuren, Detlef & Kirchherr, Julian, 2022. "The Belt and Road Initiative (BRI): What Will it Look Like in the Future?," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
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    Keywords

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    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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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