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Unemployment Compensation and Wages: Evidence from the German Hartz Reforms

Stefan Arent () and Wolfgang Nagl

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2013, vol. 233, issue 4, 450-466

Abstract: Using the introduction of fixed unemployment assistance in Germany in 2005 as a unique natural experiment, we find strong evidence that decreased unemployment compensation has an adverse effect on wages. We use micro panel data to identify and estimate the effect of this structural break. In eastern and western Germany, the relative effect is higher for women. In western Germany, the relative effect increases with skill level. In eastern Germany, there is no clear skill-specific pattern.

Keywords: Hartz reforms; unemployment compensation; wages (search for similar items in EconPapers)
Date: 2013
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