The Fall in German Unemployment: A Flow Analysis

Carlos Carrillo-Tudela, Andrey Launov () and Jean-Marc Robin

No 11442, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we investigate the recent fall in unemployment, and the rise in part-time work, labour market participation, inequality and welfare in Germany. Unemployment fell because the Hartz IV reform induced a large fraction of the long-term unemployed to deregister as jobseekers and appear as non-participants. Yet, labour force participation increased because many unregistered-unemployed workers ended up accepting low-paid part-time work that was offered in quantity in absence of a universal minimum wage. A large part of the rise in part-time work was also due to the tax benefits Hartz II introduced to take up a mini-job as secondary employment. This has provided an easy way to top-up labour income staggering under the pressure of wage moderation. The rise in part-time work led to an increase in inequality at the lower end of income distribution. Overall we find that Germany increased welfare as unemployment fell.

Keywords: income inequality; multiple job holding; non-participation; mini-jobs; part-time work; unemployment; Germany; Hartz reforms (search for similar items in EconPapers)
JEL-codes: J21 J31 J63 J64 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2018-03
New Economics Papers: this item is included in nep-lma and nep-ltv
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Citations: View citations in EconPapers (11)

Published - published in: European Economic Review, 2021, 132, 103658

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Related works:
Journal Article: The fall in german unemployment: A flow analysis (2021)
Working Paper: The Fall in German Unemployment: A Flow Analysis (2021)
Working Paper: The Fall in German Unemployment: A Flow Analysis (2021)
Working Paper: The Fall in German Unemployment: A Flow Analysis (2020)
Working Paper: The Fall in German Unemployment: A Flow Analysis (2018)
Working Paper: The Fall in German Unemployment: A Flow Analysis (2018)
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