Hartz IV and the Decline of German Unemployment: A Macroeconomic Evaluation

Hochmuth, Brigitte; Kohlbrecher, Britta; Merkl, Christian; Gartner, Hermann

doi:10.2139/ssrn.3805459

Cited by 7 publications

(11 citation statements)

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“…Critics, in turn, doubt the thesis of the positive labor market effects of the reforms and cite other reasons for the reduction in unemployment. (Macro)economic analyses of the reforms (e.g., Krebs andScheffel, 2013, 2017;Launov and Wälde, 2013;Hartung et al, 2018;Bradley and Kügler, 2019;Hochmuth et al, 2021) show that the reforms indeed played an important role for the decline in (structural) unemployment, but they are not the only explanatory factor for the positive labor market development.…”

Section: A2 Macroeconomic Backgroundmentioning

confidence: 99%

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Inequality and Income Dynamics in Germany

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Section: A2 Macroeconomic Backgroundmentioning

confidence: 99%

“…Dustmann et al 2014, Hoffmann andLemieux 2016). (Macro)economic analyses of the Hartz reforms (e.g., Krebs and Scheffel, 2013;Launov and Wälde, 2013;Hartung et al, 2018;Bradley and Kügler, 2019;Hochmuth et al, 2021) show that the reforms did play an important role for the decline in unemployment, but other factors were also important.…”

Section: Introductionmentioning

confidence: 99%

Inequality and Income Dynamics in Germany

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“…Launov and Wälde, 2016; Klinger and Weber, 2016; Hertweck and Sigrist, 2015), as well as lower separation rates (Hartung, Jung and Kuhn, 2018; Klinger and Weber, 2016). Some have argued that worsened outside options have increased the willingness of the unemployed to make concessions (Krebs and Scheffel, 2013) and have connected the social benefit reform to increased selection rates and vacancy postings (Hochmuth et al ., 2021). Others have pointed to a positive effect of moderate wages and flexible wage setting (Dustmann et al ., 2014).…”

Section: Introductionmentioning

confidence: 99%

Which factors were behind Germany's labour market upswing? A data‐driven approach*

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Germany has experienced a strong and sustained labour market upswing since the mid-2000s. While various studies have highlighted different specific reasons for this development, this study contributes to the debate by simultaneously considering a broad set of candidate factors for the upswing in a unified methodological framework and systematically weighing them against each other on an empirical basis. We develop a structural macroeconometric framework that leaves as many of the systematic interlinkages as possible for empirical determination while operating with a minimal set of restrictions in order to identify economically meaningful shocks. For this purpose, we combine shortand long-run restrictions based on established assumptions on labour force development, technological change, and search and matching in the labour market. Matching efficiency, the intensity of job creation, the growing labour force, and the declining propensity to separate explain most of the German labour market upswing.

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“…11 There are several reasons for this improvement: Some economists credit the 2003–2006 labor market reforms (“Hartz reforms”) and the short‐time work program (Gehrke, Lechthaler, and Merkl (2019)), while others claim that the combination of flexible collective bargaining institutions and restructuring of supply chains were the driving forces (e.g., Dustmann, Fitzenberger, Schönberg, and Spitz‐Oener (2014), Hoffmann and Lemieux (2016)). (Macro)economic analyses of the Hartz reforms (e.g., Krebs and Scheffel (2013), Launov and Wälde (2013), Hartung, Jung, and Kuhn (2018), Bradley and Kügler (2019), Hochmuth, Kohlbrecher, Merkl, and Gartner (2021)) show that the reforms did play an important role for the decline in unemployment, but other factors were also important. …”

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Inequality and income dynamics in Germany

Drechsel-Grau

Peichl

Schmid

et al. 2022

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We provide a comprehensive analysis of income inequality and income dynamics for Germany over the last two decades. Combining personal income tax and social security data allows us—for the first time—to offer a complete picture of the distribution of annual earnings in Germany. We find that cross‐sectional inequality rose until 2009 for men and women. After the Great Recession, inequality continued to rise at a slower rate for men and fell slightly for women due to compression at the lower tail. We further document substantial gender differences in average earnings and inequality over the life cycle. While for men earnings rise and inequality falls as they grow older, many women reduce working hours when starting a family such that average earnings fall and inequality increases. Men's earnings changes are on average smaller than women's but are substantially more affected by the business cycle. During the Great Recession, men's earnings losses become magnified and gains are attenuated. Apart from recession years, earnings changes are significantly right‐skewed reflecting the good overall state of the German labor market and increasing labor supply. In the second part of the paper, we study the distribution of total income including incomes of self‐employed, business owners, and landlords. We find that total inequality increased significantly more than earnings inequality. Regarding income dynamics, entrepreneurs' income changes are more dispersed, less skewed, less leptokurtic, and less dependent on average past income than workers' income changes. Finally, we find that top income earners have become less likely to fall out of the top 1 and 0.1%.

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Hartz IV and the Decline of German Unemployment: A Macroeconomic Evaluation

Cited by 7 publications

References 2 publications

Inequality and Income Dynamics in Germany

Inequality and Income Dynamics in Germany

Which factors were behind Germany's labour market upswing? A data‐driven approach*

Inequality and income dynamics in Germany

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