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The Heterogeneity and Cyclical Sensitivity of Unemployment: An Exploration of German Labor Market Flows

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  • Schmidt, Christoph M.

    () (RWI)

Abstract

It is often argued that the labor market outcomes of several "problem groups" of German workers suffer disproportionately in an economic downturn. These groups are women, the unskilled, and young and old workers, respectively. Using monthly individual-level data for West Germany for the period 1983 to 1994, this paper explores both the demographic heterogeneity of German unemployment in the long term, and the cyclical sensitivity of the unemployment experience across demographic groups. The analysis moves beyond that of unemployment rates to a detailed investigation of transition rates from employment to unemployment and vice versa. While long-term differences across demographic groups are dominating the structure of both job loss and re-employment, estimation of a nonlinear regression model reveals additional aspects of cyclical sensitivity. In particular, young workers experience drastically more pronounced swings in their labor market performance than the average worker, whereas old workers seem basically isolated from the economic cycle. By contrast, in terms of its cyclical sensitivity, the labor market performance of women and of unskilled workers is not dramatically different from that of the average worker.

Suggested Citation

  • Schmidt, Christoph M., 1999. "The Heterogeneity and Cyclical Sensitivity of Unemployment: An Exploration of German Labor Market Flows," IZA Discussion Papers 84, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp84
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    References listed on IDEAS

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    Cited by:

    1. Ronald Bachmann, 2005. "Labour Market Dynamics in Germany: Hirings, Separations, and Job-to-Job Transitions over the Business Cycle," SFB 649 Discussion Papers SFB649DP2005-045, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    2. Jochen Kluve & Christoph M. Schmidt, 2002. "Can training and employment subsidies combat European unemployment?," Economic Policy, CEPR;CES;MSH, vol. 17(35), pages 409-448, October.
    3. Christoph M. Schmidt, 2000. "Arbeitsmarktpolitische Massnahmen und ihre Evaluierung: eine Bestandsaufnahme," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 69(3), pages 425-437.
    4. Schaffner, Sandra, 2009. "Heterogeneity in the Cyclical Sensitivity of Job-to-Job Flows," Ruhr Economic Papers 118, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item

    Keywords

    labor market states; Skills; transitions; unemployment duration;

    JEL classification:

    • 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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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