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Fixing the leak: unemployment incidence before and after the 2006 reform of unemployment benefits in Germany

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  • Dlugosz, Stephan
  • Stephan, Gesine
  • Wilke, Ralf A.

Abstract

From 2002-2004, the German government passed several laws that curtailed the generosity of the unemployment compensation system. One of the most ambitious changes was a considerable reduction in unemployment benefit entitlement lengths for older unemployed, which was effective during 2006 and 2007. We apply a difference-in-differences approach to show that the highly disputed reform induced a considerable decline in unemployment incidence among older workers. It thus sealed an important leak in the unemployment insurance system. Furthermore, we find a strong anticipation effect; unemployment entries of elderly workers peaked during the months preceding the reform.

Suggested Citation

  • Dlugosz, Stephan & Stephan, Gesine & Wilke, Ralf A., 2009. "Fixing the leak: unemployment incidence before and after the 2006 reform of unemployment benefits in Germany," ZEW Discussion Papers 09-079, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:09079
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    Cited by:

    1. Barbara Hanel, 2010. "Disability Pensions and Labor Supply," Working Papers 086, Bavarian Graduate Program in Economics (BGPE).
    2. Dietz, Martin & Walwei, Ulrich, 2011. "Germany - no country for old workers?," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(4), pages 363-376.
    3. Bruno Amable & Baptiste Françon, 2014. "The Effect of the Hartz Reform on Unemployment Duration and Post-Unemployment Outcomes. A Difference-in-Differences Approach," Documents de travail du Centre d'Economie de la Sorbonne 14020, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. Boockmann, Bernhard & Fries, Jan & Göbel, Christian, 2018. "Specific measures for older employees and late career employment," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 159-174.
    5. Felix Hüfner & Caroline Klein, 2012. "The German Labour Market: Preparing for the Future," OECD Economics Department Working Papers 983, OECD Publishing.
    6. Wolfgang Nagl & Michael Weber, 2014. "Unemployment compensation and unemployment duration before and after the German Hartz IV reform," ifo Working Paper Series 186, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Christl, Michael & Kucsera, Dénes & Lorenz, Hanno, 2015. "Jung, älter, arbeitslos? Wie Ältere länger in Beschäftigung gehalten werden können, ohne die Jungen in die Arbeitslosigkeit zu treiben," EconStor Research Reports 119605, ZBW - Leibniz Information Centre for Economics.
    8. Dlugosz, Stephan & Stephan, Gesine & Wilke, Ralf A., 2009. "Verkürzte Bezugsdauern für Arbeitslosengeld: Deutliche Effekte auf die Eintritte in Arbeitslosigkeit (The 2006 reform of unemployment benefit entitlement lengths in Germany: considerable effects on en," IAB-Kurzbericht 200930, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Stephan, Gesine & van den Berg, Gerard & Homrighausen, Pia, 2016. "Randomizing information on a targeted wage support program for older workers: A field experiment," VfS Annual Conference 2016 (Augsburg): Demographic Change 145487, Verein für Socialpolitik / German Economic Association.
    10. Emma Tominey, 2013. "Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock," Working Papers 2013-016, Human Capital and Economic Opportunity Working Group.
    11. Lo, Simon M.S. & Stephan, Gesine & Wilke, Ralf, 2012. "Estimating the Latent Effect of Unemployment Benefits on Unemployment Duration," IZA Discussion Papers 6650, Institute of Labor Economics (IZA).
    12. Kloß, Michael & Nagl, Wolfgang, 2013. "Unemployment compensation and unemployment duration - Evidence from the German Hartz IV reform," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79711, Verein für Socialpolitik / German Economic Association.
    13. Dlugosz, Stephan & Stephan, Gesine & Wilke, Ralf A., 2011. "Kürzere Bezugshöchstdauern von ALG und Effekte auf die Eintritte in Arbeitslosigkeit," ZEW Wachstums- und Konjunkturanalysen, ZEW - Leibniz Centre for European Economic Research, vol. 14(2), pages 8-9.
    14. Goerke Laszlo & Pannenberg Markus, 2011. "'Take It or Go to Court': The Impact of Sec. 1a of the German Protection Against Dismissal Act on Severance Payments," Review of Law & Economics, De Gruyter, vol. 7(2), pages 377-404, December.
    15. Hanel, Barbara, 2012. "The effect of disability pension incentives on early retirement decisions," Labour Economics, Elsevier, vol. 19(4), pages 595-607.
    16. Viktor Steiner, 2017. "The labor market for older workers in Germany [Der Arbeitsmarkt für ältere Arbeitnehmer in Deutschland]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 50(1), pages 1-14, August.
    17. Dietz, Martin & Walwei, Ulrich, 2011. "Germany - no country for old workers?," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(4), pages 363-376.

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    More about this item

    Keywords

    unemployment incidence; policy evaluation; administrative data;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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