Distributional Consequences of Labor Demand Adjustments to a Downturn: A Model-Based Approach with Application to Germany 2008-09

Olivier Bargain, Herwig Immervoll, Andreas Peichl and Sebastian Siegloch

No 5220, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Macro-level changes can have substantial effects on the distribution of resources at the household level. While it is possible to speculate about which groups are likely to be hardest-hit, detailed distributional studies are still largely backward-looking. This paper suggests a straightforward approach to gauge the distributional and fiscal implications of large output changes at an early stage. We illustrate the method with an evaluation of the impact of the 2008-2009 crisis in Germany. We take as a starting point a very detailed administrative matched employer-employee dataset to estimate labor demand and predict the effects of output shocks at a disaggregated level. The predicted employment effects are then transposed to household-level microdata, in order to analyze the incidence of rising unemployment and reduced working hours on poverty and inequality. We focus on two alternative scenarios of the labor demand adjustment process, one based on reductions in hours (intensive margin) and close to the German experience, and the other assuming extensive margin adjustments that take place through layoffs (close to the US situation). Our results suggest that the distributional and fiscal consequences are less severe when labor demand reacts along the intensive margin.

Keywords: labor demand; tax-benefit system; crisis; income distribution (search for similar items in EconPapers)
JEL-codes: D58 H24 H60 J23 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010-09
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - revised version published as 'Distributional consequences of labor-demand shocks: the 2008–2009 recession in Germany' in: International Tax and Public Finance , 2012, 19 (1), 118-138

Downloads: (external link)
https://docs.iza.org/dp5220.pdf (application/pdf)

Related works:
Working Paper: Distributional Consequences of Labor Demand Adjustments to a Downturn: A Model-Based Approach with Applications to Germany 2008-09 (2010)
Working Paper: Distributional Consequences of Labor Demand Adjustments to a Downturn: A Model-Based Approach with Application to Germany 2008-09 (2010)
Working Paper: Distributional consequences of labor demand adjustments to a downturn: a model-based approach with application to Germany 2008-09 (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp5220

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().