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The German Labor Market Reforms and Post-Unemployment Earnings

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Listed:
  • Niklas Engbom
  • Enrica Detragiache
  • Faezeh Raei

Abstract

In 2003–05, Germany undertook extensive labor market reforms which were followed by a large and persistent decline in unemployment. Key elements of the reforms were a drastic cut in benefits for the long-term unemployed and tighter job search and acceptance obligations. Using a large confidential data set from the German social security administration, we find that the reforms were associated with a fall in the earnings of workers returning to work from short-term unemployment relative to workers in long-term employment of about 10 percent. We interpret this as evidence that the reforms strengthened incentives to return to work but, in doing so, they adversely affected post re-entry earnings.

Suggested Citation

  • Niklas Engbom & Enrica Detragiache & Faezeh Raei, 2015. "The German Labor Market Reforms and Post-Unemployment Earnings," IMF Working Papers 15/162, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:15/162
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    References listed on IDEAS

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    Cited by:

    1. Krebs, Tom & Scheffel, Martin, 2016. "Labor Market Institutions and the Cost of Recessions," IZA Discussion Papers 10442, Institute of Labor Economics (IZA).
    2. John T. Addison, 2016. "Collective bargaining systems and macroeconomic and microeconomic flexibility: the quest for appropriate institutional forms in advanced economies," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-53, December.
    3. repec:bpj:bejeap:v:19:y:2019:i:2:p:22:n:11 is not listed on IDEAS
    4. Ilse Leidl-Krapfenbauer & Norman Wagner, 2015. "Sackgasse „Hartz IV". Warum Österreich keine Arbeitsmarktreformen nach deutschem Vorbild braucht," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 41(4), pages 545-564.
    5. Casares, Miguel & Vázquez, Jesús, 2018. "Why are labor markets in Spain and Germany so different?," Economic Modelling, Elsevier, vol. 75(C), pages 320-335.

    More about this item

    Keywords

    Germany; Unemployment; Labor market reforms; labor market; workers; labor; unemployment benefits; Unemployment: Models; Duration; Incidence; and Job Search; Germany.;

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