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The Fall in German Unemployment: A Flow Analysis

Author

Listed:
  • Carlos Carrillo-Tudela

    (University of Essex, CEPR - Center for Economic Policy Research, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics)

  • Andrey Launov

    (UK - University of Kentucky, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics)

  • Jean-Marc Robin

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, UCL - University College London [UCL])

Abstract

In this paper we investigate the recent fall in unemployment, and the rise in part-time work and labour market participation among prime-aged Germans. We show that unemployment fell because the Hartz reforms induced a large fraction of the long-term unemployed to deregister as jobseekers. However, labour force participation actually increased because many female non-participants accepted low-paid, part-time jobs. Counterfactual simulations using estimated transition probabilities show that observed changes in the stocks of registered and unregistered unemployment after 2002 essentially resulted from changes in their outflows. These changes are also the main determinants of the dynamics of the stocks of marginal, contributing part-time and full-time employment after 2002. Yet the full decrease in registered male unemployment cannot be explained by the reforms alone.

Suggested Citation

  • Carlos Carrillo-Tudela & Andrey Launov & Jean-Marc Robin, 2021. "The Fall in German Unemployment: A Flow Analysis," Sciences Po Economics Publications (main) hal-03868017, HAL.
    • Handle: RePEc:hal:spmain:hal-03868017
    DOI: 10.1016/j.euroecorev.2021.103658
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    Keywords

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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