Universität zu Köln

Krebs, Tom and Scheffel, Martin (2013). Macroeconomic Evaluation of Labor Market Reform in Germany. IMF Econ. Rev., 61 (4). S. 664 - 702. BASINGSTOKE: PALGRAVE MACMILLAN LTD. ISSN 2041-417X

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Abstract

In 2003-05 the German government implemented a number of far-reaching labor market reforms, the so-called Hartz reforms. At the heart of the reform package was the Hartz IV law, which resulted in a significant cut in the unemployment benefits for the long-term unemployed. The paper develops a macroeconomic model with search and incomplete markets, calibrates the model economy to German data and institutions, and uses the calibrated model economy to simulate the effects of the Hartz reforms, and in particular Hartz IV, on the German labor market. The paper finds that the Hartz IV reform reduced the noncyclical unemployment rate in Germany by 1.4 percentage points. Employed workers benefited from the Hartz IV reform in welfare terms, but unemployed workers lost. It further finds that the Hartz I-III reforms reduced the noncyclical unemployment rate in Germany by 1.5 percentage points. Finally, the authors' analysis suggests that the Hartz reforms contributed to the good performance of the German labor market during the Great Recession.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Krebs, Tom UNSPECIFIED UNSPECIFIED UNSPECIFIED Scheffel, Martin UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-471467
DOI:	10.1057/imfer.2013.19
Journal or Publication Title:	IMF Econ. Rev.
Volume:	61
Number:	4
Page Range:	S. 664 - 702
Date:	2013
Publisher:	PALGRAVE MACMILLAN LTD
Place of Publication:	BASINGSTOKE
ISSN:	2041-417X
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language OPTIMAL UNEMPLOYMENT-INSURANCE; MORAL HAZARD; LIQUIDITY; TERM Multiple languages Business, Finance; Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/47146