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GDP-Employment Decoupling and the Productivity Puzzle in Germany

Sabine Klinger () and Enzo Weber

No 485, University of Regensburg Working Papers in Business, Economics and Management Information Systems from University of Regensburg, Department of Economics

Abstract: This paper investigates the productivity puzzle in Germany. We focus on 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 both persistent and cyclical time variation in the employment impact of GDP as well as an autonomous employment component capturing other factors than real output. As one result, we measure a permanent decline in GDP impact on employment as well as pronounced effects of the autonomous employment component in the recent years. The development of the estimated impact parameters depends on structural change, but also on labour availability and business expectations. Beyond GDP, a high labour supply, tightness as well as moderate wages and working time reductions boosted employment growth.

Keywords: decoupling; productivity puzzle; unobserved components; time-varying coefficient; Verdoorn´s law (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-eur and nep-mac
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