Unemployment is still disappointingly high in most Central and East European countries, which may be a reflection of the ongoing adjustment to institutional shocks resulting from systemic transition, or may be caused by high labour market rigidity or aggregate demand that is too weak. This article investigates the dynamics of unemployment and output in those eight post-communist countries which entered the EU in 2004. We use a model related to Okun's Law; i.e. the first differences in unemployment rates are regressed on GDP growth rates. We estimate country and panel regressions with instrument variables (TSLS) and apply some tests to the data and regression results. We assume transition of labour markets to be accomplished when a robust relationship exists between unemployment rate changes and GDP growth. Moreover, the estimated coefficients contain information about labour market rigidity and unemployment thresholds of output growth. Our results suggest that the transition of labour markets can be regarded as completed since unemployment responds to output changes and not to a changing institutional environment that destroys jobs in the state sector. The regression coefficients demonstrate that a high trend rate of productivity and a high unemployment intensity of output growth have been observable since 1998. Therefore, we conclude that labour market rigidities do not play an important role in explaining high unemployment rates. However, GDP growth is dominated by productivity progress and the employment-relevant component of aggregate demand is too low to reduce the high level of unemployment substantially.
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.
In the paper we simulate a revenue-neutral cut in the social security contribution rate using five different types of macro-/ microeconomic models, namely two models based on time-series data where the labour market is modelled basically demand oriented, two models of the class of computable equilibrium models which are supply oriented and finally a firm specific model for international tax burden comparisons. Our primary interest is in the employment effects the models predict due to the cut in the contribution rate. It turns out that qualitatively all models considered predict an increase in employment three years after the cut. But the employment effects differ considerably in magnitude, which follows immediately from the different behavioral assumptions underlying the different models. ZusammenfassungIn dem Beitrag wird der Beschäftigungseffekt infolge einer aufkommensneutralen Senkung der Sozialversicherungsbeiträge simuliert. Zu diesem Zweck werden fünf unterschiedliche ökono-mische Modelle verwendet, namentlich zwei Modelle, die auf Zeitreihendaten aufbauen und in denen der Arbeitsmarkt überwiegend von der Nachfrageseite dominiert wird, zwei Modelle aus der Klasse der computable equilibrium models, die typischerweise angebotsorientiert sind, und ein mikroökonomisches, firmenspezifisches Steuerbelastungsvergleichsmodell. Alle Simulationsergebnisse der Modelle weisen auf einen, wenngleich teilweise kleinen, positiven Beschäfti-gungseffekt hin, der sich allerdings beträchtlich in seiner Größenordnung unterscheidet. Dies ist eine unmittelbare Folge aus den unterschiedlichen Verhaltensannahmen, die den einzelnen Modellen unterliegen.3
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The unemployment-growth relationship in transition countries Terms of use: Documents in AbstractDoes the disappointingly high unemployment in Central and East European countries reflect non-completed adjustment to institutional shocks from transition to a market economy, or is it the result of high labour market rigidities, or rather a syndrome of too weak aggregate demand and output? In the case of transitional causes, unemployment is expected to decline over time. Otherwise, it would pose a challenge to the European Union, particular in case of accession countries, for it jeopardizes the ambitious integration plans of, and may trigger excessive migration to the Union. In order to find out which hypothesis holds 15 years after transition has started, we analyze the unemploymentgrowth dynamics in the eight new member countries from Central-Eastern Europe. The study is based on country and panel regressions with instrument variables (TSLS). The results suggest to declare the transition of labour markets as completed; unemployment responds to output and not to a changing institutional environment for job creation. The regression coefficients report a high trend rate of productivity and a high unemployment intensity of output growth since 1998. The conclusion is that labour market rigidities do not to play an important role in explaining high unemployment rates. Rather, GDP growth is dominated by productivity progress, while the employment relevant component of aggregate demand is too low to reduce substantially the high level of unemployment.JEL classifications: E24, J23, P23
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractSeveral factors bring about a rise in old age poverty in Germany, especially in East Germany. Using data from the German Socio-economic Panel (SOEP) we examine causes and extent of old age poverty in Germany. We begin our inquiry with a cross section regression in order to determine the impact of several factors on retirement incomes in Germany. In the second step we perform an income projection of today's 50 to 55 year-old people for the year 2023. In doing so, we take into account different sources of income, including several forms of capital income and the calculated rent of owner-occupied houses and flats. We find a significant rise in old age poverty especially in East Germany as a consequence of rising unemployment after the German unification.
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