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Unemployment compensation and unemployment duration before and after the German Hartz IV reform

Wolfgang Nagl and Michael Weber

No 186, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: In 2005, the unemployment benefits for long-term unemployed were reduced in Germany. We investigate the effect of this reform on the transition probability from unemployment to employment using a large German administrative spell data set (SIAB 1975–2010). We estimate that the daily transition probability of medium wage earners increased on average by 24% after the reform. The effect is lower for both, low and high wage earners. Men were less affected than women and West Germans were less affected than East Germans. For short-term unemployed the effect is increasing over unemployment duration while long-term unemployed apparently did not benefit from the reform.

Keywords: Duration analysis; hazard rate; unemployment benefit; Hartz reform (search for similar items in EconPapers)
JEL-codes: J64 J68 (search for similar items in EconPapers)
Date: 2014
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