The Impact of Labour Market Reforms and Economic Performance on the Matching of the Short‐term and the Long‐term Unemployed

Klinger, Sabine; Rothe, Thomás

doi:10.1111/j.1467-9485.2011.00570.x

Cited by 85 publications

(87 citation statements)

References 37 publications

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“…Yet, the joint impact of the first three Hartz law packages on the matching efficiency has been a visible 10-15% within a very short period after their introduction according to the authors' estimates. In a more recent study, Klinger and Rothe (2012) obtain very similar numbers. Hertweck and Sigrist (2013) estimate the range of increase in the efficiency of the matching process in Western Germany of the combined reforms to lie between 12% and 31%, whereby their point estimate, a 23% decrease in the matching efficiency, corresponds to a 20% decrease in the unemployment rate.…”

Section: Related Literaturesupporting

confidence: 64%

“…This value is lower than the point estimate of 23% provided by Hertweck and Sigrist (2013), while it is higher than the estimates of 10-15% reported by Fahr and Sunde (2009) and Klinger and Rothe (2012). Starting out with the parametrization of Germany and the EA as described above for 2003, the adjustment paths of the selected variables of both economies are illustrated in Figure 1.…”

contrasting

confidence: 42%

“…Note, however, that Germany differs significantly from the average of the remaining EA-12 countries in this respect, particularly in terms of labour taxation. In addition, recall from Section 2 that studies by Fahr and Sunde (2009), Klinger and Rothe (2012) and Hertweck and Sigrist (2013) found a significant increase in the matching efficiency of between 12% and 31% as consequence of the reform package.…”

Section: The Impact Of the Reforms In Germanymentioning

confidence: 99%

See 2 more Smart Citations

The German Labour Market Reforms in a European Context: A DSGE Analysis

Busl

Seymen

2013

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract While a widespread consensus exists among macroeconomists that the German labour market reforms in [2003][2004][2005] have successfully contributed to the decline of the unemployment rate, critics claim that the reforms led to wage restraint and consequently consumption dampening accompanied by beggar-thy-neighbour effects, harming Germany's trade partners. We check up on the validity of these arguments by means of a two-country DSGE model featuring intra-industry trade and labour market frictions. Our results suggest that the disproportional growth of GDP (labour productivity) in comparison to consumption (wages) are only partially driven by the reforms. However, we do not find that the reforms contribute to Germany's trade surplus and cause negative spillovers to trading partners in terms of output and employment. The German Labour Market Reforms in a EuropeanJEL classification: E24, E61, E65, F42, J38, J63

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Section: Related Literaturesupporting

confidence: 64%

contrasting

confidence: 42%

Section: The Impact Of the Reforms In Germanymentioning

confidence: 99%

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The German Labour Market Reforms in a European Context: A DSGE Analysis

Busl

Seymen

2013

SSRN Journal

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“…René Fahr and Uwe Sunde (2009) and Klinger and Thomas Rothe (2010) find that the efficiency of the job matching function increased, and Gartner and Klinger (2011) observe that the Beveridge curve shifted inward and continues to do so. Overall, the hypothesis that the Hartz reforms reduced unemployment by increasing employment, possibly with a lag that led their effect to continue into the recession, is plausible.…”

mentioning

confidence: 99%

What Explains the German Labor Market Miracle in the Great Recession?

Burda

Hunt

2011

103

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NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.© 2011 by Michael C. Burda and Jennifer Hunt. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. What Explains the German Labor Market Miracle in the Great ABSTRACTGermany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss. Employers' reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession. Another 20 percent may be explained by wage moderation. A third important element was the widespread adoption of working time accounts, which permit employers to avoid overtime pay if hours per worker average to standard hours over a window of time. We find that this provided disincentives for employers to lay off workers in the downturn. Although the overall cuts in hours per worker were consistent with the severity of the Great Recession, reduction of working time account balances substituted for traditional government-sponsored short-time work. Considering the much greater decline in GDP in the Great Recession, however, the similarity of the declines in person-hours is a surprise.In this paper we investigate the reasons for this significant deviation from historical experience in the German labor market response to the 2008-09 recession. We highlight the fact that employment rose less than expected in the preceding expansion, given changes in GDP and labor costs, and that half of this shortfall can be explained using data on employers' business expectations. Employers lacked confidence that the boom would last, or were perhaps uncertain about how long it would last, and therefore they hired less than would have been predicted given contemporaneous conditions. Consequently, they were able to avoid costly layoffs when the recession arrived. Our survey of reporting by the Handelsblatt business newspaper confirms a general impression that firms downsized and restructured in the 2005-06 period, out of caution about the extent and persistence of the business upturn. The missing employment increase in the boom accounts for 41 percent of the missing employment decline in the recession, and 23 percent of that missing decline can be linked to pessimistic expectations in the expansion.If labor costs responded more flexibly than in the past to mitigate employment losses, this could also contribute to explaining the unusually mild labor market response to the recession.However, the fall in labor costs came too late to stem employment losses. Some previous analysts Although we cannot account for about 40 percent of the missing decline in employment, we believe that a per...

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“…Launov & Wälde (2010), by contrast, argue that the effects are rather close to zero. Most empirical policy evaluations (Fertig et al 2007, Fahr & Sunde 2009, Klinger & Rothe 2012, on the other hand, are based on regional and/or occupational panel data from the Federal Employment Agency. However, due to several methodological breaks, the time series published prior to January 2008 are not fully consistent (Bundesagentur für Arbeit 2009, Section 4.1.2).…”

Section: Introductionmentioning

confidence: 99%

The Aggregate Effects of the Hartz Reforms in Germany

Hertweck

Sigrist

2013

SSRN Journal

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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 AbstractThis paper quantifies the impact of the Hartz reforms on matching efficiency, using monthly SOEP gross worker flows . We show that, until the early 2000s, close to 60% of changes in the unemployment rate are due to changes in the inflow rate (job separation). On the contrary, since the implementation of the reforms in the mid-2000s, the importance of the outflow rate (job finding) has been steadily increasing. This indicates that matching efficiency has improved substantially in recent years. Results from an estimated matching function -pointing to efficiency gains of more than 20% -corroborate this finding. JEL Classifications: E24, E32, J63, J64

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The Impact of Labour Market Reforms and Economic Performance on the Matching of the Short‐term and the Long‐term Unemployed

Cited by 85 publications

References 37 publications

The German Labour Market Reforms in a European Context: A DSGE Analysis

The German Labour Market Reforms in a European Context: A DSGE Analysis

What Explains the German Labor Market Miracle in the Great Recession?

The Aggregate Effects of the Hartz Reforms in Germany

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