GDP-employment decoupling in Germany

Sabine Klinger and Enzo Weber

Structural Change and Economic Dynamics, 2020, vol. 52, issue C, 82-98

Abstract: This paper investigates the time-varying relationship between German output and employment growth, in particular their decoupling in recent years. We estimate a correlated unobserved components model that allows for persistent and cyclical time variation in the employment-GDP linkage as well as an additional employment component beyond the one linked to GDP. Controlling for the latter yields a more precise classification of what is a jobless recovery or a labour hoarding recession. We find that the comovement of employment and GDP has loosened permanently since the Great Recession while the comovement with other variables than GDP has become tighter. The decoupling goes hand in hand with the change of the sectoral composition of the economy, especially the rise of the service sector. Beyond that, high labour market tightness and at the same time high labour supply carried recent employment growth. The industry mix, wages and working time had a smaller influence.

Keywords: GDP; Employment; Decoupling; Unobserved components; Time-varying coefficient (search for similar items in EconPapers)
JEL-codes: C32 E24 E32 J23 J24 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0954349X19300153
Full text for ScienceDirect subscribers only

Related works:
Working Paper: On GDP-employment decoupling in Germany (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:52:y:2020:i:c:p:82-98

DOI: 10.1016/j.strueco.2019.10.003

Access Statistics for this article

Structural Change and Economic Dynamics is currently edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen

More articles in Structural Change and Economic Dynamics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().