Public Employment Agency Reform, Matching Efficiency, and German Unemployment

Christian Merkl and Timo Sauerbier ()
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Timo Sauerbier: Friedrich-Alexander-Universität Erlangen-Nürnberg

IMF Economic Review, 2024, vol. 72, issue 1, No 10, 393-440

Abstract: 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.

JEL-codes: E00 E24 E60 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Public Employment Agency Reform, Matching Efficiency, and German Unemployment (2023)
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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DOI: 10.1057/s41308-023-00201-2

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