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(Spillover) Effects of Labour Market Reforms in Germany and France

  • Claudia Busl
  • Atilim Seymen

In this paper we analyze the (potential) effects of labour market and fiscal policy reforms by heterogeneous European countries—Germany and France—on the domestic and foreign economy. We test the implications of the gains in matching efficiency and reduced unemployment benefits induced by the German Hartz reforms in a two-country RBC model with frictions in the labour market, which replicates the data quite well. We then explore the reform possibilities in the French labour market and their potential (inter)national effects by calibrating the model to recent data. Both home and foreign economies benefit from labour market reforms in the home economy in our framework.

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Paper provided by WWWforEurope in its series WWWforEurope Working Papers series with number 8.

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Length: 58
Date of creation: Jun 2013
Date of revision:
Publication status: published
Handle: RePEc:feu:wfewop:y:2013:m:6:d:0:i:8
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Order Information: Postal: WWWforEurope Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
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  1. Matthias S. Hertweck & Oliver Sigrist, 2013. "The Aggregate Effects of the Hartz Reforms in Germany," SOEPpapers on Multidisciplinary Panel Data Research 532, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. George Alessandria & Alain Delacroix, 2007. "Trade and the (Dis)Incentive to Reform Labor Markets: The Case of Reform in the European Union," Cahiers de recherche 0738, CIRPEE.
  3. Patureau, Lise, 2007. "Pricing-to-market, limited participation and exchange rate dynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 31(10), pages 3281-3320, October.
  4. Gabriel J. Felbermayr & Mario Larch & Wolfgang Lechthaler, 2012. "The Shimer-Puzzle of International Trade: A Quantitative Analysis," Ifo Working Paper Series Ifo Working Paper No. 134, Ifo Institute for Economic Research at the University of Munich.
  5. René Fahr & Uwe Sunde, 2009. "Did the Hartz Reforms Speed-Up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions," German Economic Review, Verein für Socialpolitik, vol. 10, pages 284-316, 08.
  6. Raquel Fonseca & Lise Patureau & Thepthida Sopraseuth, 2008. "Divergence in Labor Market Institutions and International Business Cycles," THEMA Working Papers 2008-14, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  7. Krause, Michael U. & Uhlig, Harald, 2011. "Transitions in the German labor market: Structure and crisis," Discussion Paper Series 1: Economic Studies 2011,34, Deutsche Bundesbank, Research Centre.
  8. William Nickell, 2006. "The CEP-OECD Institutions Data Set (1960-2004)," CEP Discussion Papers dp0759, Centre for Economic Performance, LSE.
  9. Jan Hogrefe & Marcus Kappler, 2013. "The labour share of income: heterogeneous causes for parallel movements?," Journal of Economic Inequality, Springer, vol. 11(3), pages 303-319, September.
  10. Tom Krebs & Martin Scheffel, 2013. "Macroeconomic Evaluation of Labor Market Reform in Germany," IMF Economic Review, Palgrave Macmillan, vol. 61(4), pages 664-701, December.
  11. Chetty, Nadarajan & Weber, Andrea & Guren, Adam Michael & Day, Manoli, 2011. "Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins," Scholarly Articles 11878970, Harvard University Department of Economics.
  12. Faia, Ester & Lechthaler, Wolfgang & Merkl, Christian, 2013. "Fiscal stimulus and labor market policies in Europe," Journal of Economic Dynamics and Control, Elsevier, vol. 37(3), pages 483-499.
  13. Felbermayr, Gabriel & Larch, Mario & Lechthaler, Wolfgang, 2012. "Labour market reforms in a globalised world," Munich Reprints in Economics 20599, University of Munich, Department of Economics.
  14. Campolmi, Alessia & Faia, Ester, 2011. "Labor market institutions and inflation volatility in the euro area," Journal of Economic Dynamics and Control, Elsevier, vol. 35(5), pages 793-812, May.
  15. Jacobi, Lena & Kluve, Jochen, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," RWI Discussion Papers 41, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI).
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