The evolution of job stability and wages after the implementation of the Hartz reforms

Abstract

We address the concerns about rising inequality in the German labour market after the implementation of the Hartz reforms between 2003 and 2005. We focus on the quality of new jobs started between 1998 and 2010 in West Germany in terms of job stability and level of earnings. Using social security data drawn from the Integrated Employment Biographies, we analyse the distributions of job durations and wages and model their determinants at the worker level. Our results show a high degree of job stability during and after the reform years, decreasing wage levels and increasing wage dispersion. Keywords

The End of Social Security as we know it – The Erosion of Status Protection in German Labour Market Policy

“…Although the necessary minimum and maximum periods of mandatory insurance contributions for benefit entitlement have remained unchanged (at 12 months for 6 months and 24 months for 12 months of benefit duration) these new rules exclude a growing number of workers from entitlements, particularly fixed-term or temporary agency workers who have employment breaks between short-term contracts 3 . Surprisingly, overall average job tenure in the German labour market is so short that only 54 per cent of men and 61 per cent of women have job tenures of at least 12 months and only about 40 per cent reach the 24-month threshold (Giannelli et al , 2013: 27);.…”

O desenvolvimento do mercado de trabalho alemão após a Segunda Guerra Mundial

“…One major effect of the Hartz reforms has been a sharp increase of the low wage sector (Herr, 2002;Giannelli et al, 2016). This sector is defined as employees earning less than two thirds of the median wage.…”

Identifying asymmetric effects of labor market reforms

“…Also, 10 We thank Thomas Rothe for providing this data. See also Giannelli et al (2016). 11 Estimations of the reduced form of the model revealed that GDP growth with one lag, contemporaneous business expectations, and wage growth with three lags have the highest explanatory power for vacancies.…”