Reaction Patterns of German Regional Labour Markets to Macroeconomic and Policy-induced Shocks¡ª A Comparative Analysis

J¨¹rgen Roth (juergen.roth@reutlingen-university.de) and Simon G. Fauser (simon.fauser@reutlingen-university.de)
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J¨¹rgen Roth: ESB Business School, Reutlingen University, Germany
Simon G. Fauser: Heilbronn University, Germany; Reutlingen University, Germany

Review of Economics & Finance, 2011, vol. 1, 87-103

Abstract: This paper analyses labour market reactions of three representative German federal states to economic and policy-induced shocks. The magnitude of the reactions of the states to an equally strong shock on labour demand, labour supply and unemployment are observed. Differences in the structural composition of the states¡¯ economies and flexibility of the states¡¯ labour markets lead to distinct reaction patterns over time. The reaction patterns of all states are dominated by labour demand effects in the short term, whereas labour supply effects are propagated over time and, hence, from the medium term onwards dominate the development of the unemployment rate.

Keywords: Economic shocks; Regional labour markets; Germany (search for similar items in EconPapers)
JEL-codes: E24 O18 R23 (search for similar items in EconPapers)
Date: 2011
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