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Unemployment Benefits and Unemployment Rates of Low-Skilled and Elder Workers in West Germany: A Search Equilibrium Approach

Author

Listed:
  • Launov, Andrey

    (University of Kent)

  • Wolff, Joachim

    (Institute for Employment Research (IAB), Nuremberg)

  • Klasen, Stephan

    (University of Göttingen)

Abstract

In this paper we investigate whether the extension of the entitlement to unemployment benefits in the mid 80s can explain the increase in the unemployment rates of unskilled and elder workers in western Germany. To answer this question we estimate a version of the Burdett-Mortensen search equilibrium model and analyze how workers’ search behaviour responded to these reforms. We try both nonparametric and fully-parametric estimation methods and identify the cases in which the nonparametric approach cannot be applied. We find that the entitlement reforms are largely responsible for the increase of unemployment among unskilled workers.

Suggested Citation

  • Launov, Andrey & Wolff, Joachim & Klasen, Stephan, 2004. "Unemployment Benefits and Unemployment Rates of Low-Skilled and Elder Workers in West Germany: A Search Equilibrium Approach," IZA Discussion Papers 1161, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1161
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    References listed on IDEAS

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    Cited by:

    1. Giovanni Sulis, 2008. "Wage Dispersion and Equilibrium Search Models: Some Evidence from Italy," LABOUR, CEIS, vol. 22(4), pages 593-627, December.

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    More about this item

    Keywords

    search equilibrium; unemployment benefit; parametric estimation; Germany;
    All these keywords.

    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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