Macroeconomic Determinants of Involuntary Part-Time Employment in Germany

Theresa Markefke and Rebekka Rehm

No 103, Working Paper Series in Economics from University of Cologne, Department of Economics

Abstract: In times of economic crisis, employers in the US and UK reduce their employees' working hours, which results in a higher incidence of involuntary part-time work (IVPT). German labor market regulations make hours adjustments more difficult as employers need employees' consent. Against the background of this institutional difference, we use a panel regression frame- work that exploits federal state level variation to investigate the influence of cyclical, structural and institutional factors on the incidence of IVPT in Germany. In most sectors, unemployment is a key driver of IVPT. Since unilateral downward hours adjustments are hampered by regulation, we investigate the relevance of different channels that potentially explain the positive influence of unemployment on IVPT. It mainly stems from shifts in bargaining positions over the business cycle and from added labor supply on the intensive margin, that is, extended supply of already employed workers.

Date: 2020-11-16
New Economics Papers: this item is included in nep-eur
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