IDEAS home Printed from
   My bibliography  Save this article

The Empirics of Hidden Labor Force Dynamics in Germany


  • Provenzano Sandro

    () (Department of Economics Vienna University of Economics and Business, Vienna, Austria)


The unemployment rate is the core indicator when researchers and policy-makers assess the level of underemployment in an economy. However, accumulating evidence suggests that the unemployment rate is biased and underestimates the true level of underemployment. Closing this gap is especially important because the distortion systematically changes along the business cycle and affects the various subgroups of the population differently. Neglecting these effects when setting up policies might flaw its effectiveness and result in unexpected outcomes. Although the existence of these effects is widely agreed upon only little is known about the magnitude of these effects across various subgroups. Using a highly disaggregated dataset from Germany, this study examines the dynamics in labor force participation that go beyond the unemployment rate. Ample evidence is found that the discouraged and the added worker effect significantly affect particular subgroups in the German labor market. In addition, the discouraged and the added worker effect are generally found to be very symmetric in economic upturns and downturns. Moreover, the labor market reforms in Germany between 2003 and 2005 are found to have reduced the discouraged worker effect on average by 25%, leaving the added worker effect unchanged.

Suggested Citation

  • Provenzano Sandro, 2017. "The Empirics of Hidden Labor Force Dynamics in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 237(5), pages 373-406, October.
  • Handle: RePEc:jns:jbstat:v:237:y:2017:i:5:p:373-406:n:3

    Download full text from publisher

    File URL:
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to search for a different version of it.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:237:y:2017:i:5:p:373-406:n:3. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.