The Ins and Outs of German Unemployment

Carsten Ochsen

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: This paper analyzes the contribution of flow rates and flow probabilities for unemployment dynamics of different age groups using administrative panel data for Germany. I consider a three-state model and allow for flows from/to inactivity (out of the labor force) to/from unemployment. The dynamics that arise from the inactivity and activity flows account for about 40% of unemployment dynamics (inactivity is more important), while the contribution of separation and job finding is roughly 40% and 20% respectively. Across five age cohorts I find remarkable differences in flow contributions. In the steady state approach the overall contribution of inflow and outflow rates is roughly 50%:50%, but for the non-steady state approach I find a slightly stronger contribution of the outflow rates. I also point out the possibility of a regional aggregation bias that can be of similar importance as the time aggregation bias.

JEL-codes: J10 J63 J64 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:113223

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