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Unemployment Benefit and Wages: The Impact of the Labor Market Reform in Germany on (Reservation) Wages

Author

Listed:
  • Stefan Arent
  • Wolfgang Nagl

Abstract

In this paper, we contribute to the literature on the impact of the unemployment benefit on (reservation) wages. We use the German BA-Employment Panel (2008) to identify the effect of a reduced unemployment benefit due to the labor market reform of 2005 in Germany. Using this unique experiment, we find strong evidence that a lower unemployment benefit has an adverse effect on wages.

Suggested Citation

  • Stefan Arent & Wolfgang Nagl, 2011. "Unemployment Benefit and Wages: The Impact of the Labor Market Reform in Germany on (Reservation) Wages," ifo Working Paper Series 101, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_101
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Michal Moszynski, 2016. "Institutional conditioning of the German labour market in the face of the global economic crisis 2008–2009," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 15(3), pages 371-383, September.
    2. Rothe, Thomas & Giannelli, Gianna C. & Jaenichen, Ursula, 2013. "Doing well in reforming the labour market? Recent trends in job stability and wages in Germany," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79932, Verein für Socialpolitik / German Economic Association.
    3. Beissinger, Thomas & Chusseau, Nathalie & Hellier, Joël, 2015. "Offshoring and Labour Market Reforms: Modelling the German Experience," IZA Discussion Papers 8920, Institute of Labor Economics (IZA).
    4. Woodcock, Simon D., 2020. "The Effect of the Hartz Labor Market Reforms on Post-unemployment Wages, Sorting, and Matching," IZA Discussion Papers 13300, Institute of Labor Economics (IZA).
    5. Max Deter, 2021. "Hartz and Minds: Happiness Effects of Reforming an Employment Agency," Journal of Happiness Studies, Springer, vol. 22(4), pages 1819-1838, April.
    6. Thomas Beissinger & Nathalie Chusseau & Joel Hellier, 2014. "Offshoring, employment, labour market reform and inequality: Modelling the German experience," Working Papers 330, ECINEQ, Society for the Study of Economic Inequality.
    7. Niklas Engbom & Ms. Enrica Detragiache & Ms. Faezeh Raei, 2015. "The German Labor Market Reforms and Post-Unemployment Earnings," IMF Working Papers 2015/162, International Monetary Fund.

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    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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