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The Ins and Outs of German Unemployment

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  • Ochsen, Carsten

Abstract

This paper analyzes the contribution of flow rates and flow probabilities for unemployment dynamics of different age groups using administrative panel data for Germany. I consider a three-state model and allow for flows from/to inactivity (out of the labor force) to/from unemployment. The dynamics that arise from the inactivity and activity flows account for about 40% of unemployment dynamics (inactivity is more important), while the contribution of separation and job finding is roughly 40% and 20% respectively. Across five age cohorts I find remarkable differences in flow contributions. In the steady state approach the overall contribution of inflow and outflow rates is roughly 50%:50%, but for the non-steady state approach I find a slightly stronger contribution of the outflow rates. I also point out the possibility of a regional aggregation bias that can be of similar importance as the time aggregation bias.

Suggested Citation

  • Ochsen, Carsten, 2015. "The Ins and Outs of German Unemployment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113223, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc15:113223
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    More about this item

    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
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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