Public Employment Agency Reform, Matching Efficiency, and German Unemployment

Christian Merkl and Timo Sauerbier

No 10328, CESifo Working Paper Series from CESifo

Abstract: Our paper analyzes the role of public employment agencies in job matching, in particular the effects of the restructuring of the Federal Employment Agency in Germany (Hartz III labor market reform) for aggregate matching and unemployment. Based on two microeconomic datasets, we show that the market share of the Federal Employment Agency as job intermediary declined after the Hartz reforms. We propose a macroeconomic model of the labor market with a private and a public search channel and fit the model to various dimensions of the data. We show that direct intermediation activities of the Federal Employment Agency did not contribute to the decline in unemployment in Germany. By contrast, improved activation of unemployed workers reduced unemployed by 0.8 percentage points. Through the lens of an aggregate matching function, more activation is associated with a larger matching efficiency.

Keywords: Hartz reforms; search and matching; reform of employment agency (search for similar items in EconPapers)
JEL-codes: E00 E24 E60 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-dge, nep-eec, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Public Employment Agency Reform, Matching Efficiency, and German Unemployment (2024)
Working Paper: Public Employment Agency Reform, Matching Efficiency, and German Unemployment (2023)
Working Paper: Public Employment Agency Reform, Matching Efficiency, and German Unemployment (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10328

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