The German Labor Market Reforms and Post-Unemployment Earnings
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Summary:
In 2003–05, Germany undertook extensive labor market reforms which were followed by a large and persistent decline in unemployment. Key elements of the reforms were a drastic cut in benefits for the long-term unemployed and tighter job search and acceptance obligations. Using a large confidential data set from the German social security administration, we find that the reforms were associated with a fall in the earnings of workers returning to work from short-term unemployment relative to workers in long-term employment of about 10 percent. We interpret this as evidence that the reforms strengthened incentives to return to work but, in doing so, they adversely affected post re-entry earnings.
Series:
Working Paper No. 2015/162
Subject:
Employment Expenditure Labor Labor markets Unemployment Unemployment benefits Wages
English
Publication Date:
July 17, 2015
ISBN/ISSN:
9781513531250/1018-5941
Stock No:
WPIEA2015162
Pages:
26
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