The German Labor Market Reforms And Post Unemployment Earnings
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The German Labor Market Reforms and Post-Unemployment Earnings
Author | : Niklas Engbom |
Publisher | : International Monetary Fund |
Total Pages | : 26 |
Release | : 2015-07-17 |
Genre | : Business & Economics |
ISBN | : 1513564595 |
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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.
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