Unemployment Benefit and Wages: The Impact of the Labor Market Reform in Germany on (Reservation) Wages

Stefan Arent () and Wolfgang Nagl

No Ifo Working Paper No. 101, Ifo Working Paper Series from Ifo Institute for Economic Research at the University of Munich

Abstract: In this paper, we contribute to the literature on the impact of the unemployment benefit on (reservation) wages. We use the German BA-Employment Panel (2008) to identify the effect of a reduced unemployment benefit due to the labor market reform of 2005 in Germany. Using this unique experiment, we find strong evidence that a lower unemployment benefit has an adverse effect on wages.

Keywords: Unemployment benefit; reservation wages; wages. (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
Date: 2011
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