The Impact of Labour Market Reforms and Economic Performance on the Matching of the Short-term and the Long-term Unemployed

As a reaction to high and persistent unemployment in Germany, the largest labour market reforms in post‐war history were implemented between 2003 and 2005. We analyse the impact of the reforms and its coincidence with an economic expansion on the efficiency of matching out of unemployment. Especiall...

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Bibliographic Details
Published in:Scottish journal of political economy 2012-02, Vol.59 (1), p.90-114
Main Authors: Klinger, Sabine, Rothe, Thomas
Format: Article
Language:English
Subjects:
Economic performance
Economic reform
Efficiency
Employment policy
Federal Republic of Germany
Germany
Heterogeneity
Interaction
Labor market
Labour market
Labour policy
Market Economy
Reform
Studies
Unemployment
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Summary:As a reaction to high and persistent unemployment in Germany, the largest labour market reforms in post‐war history were implemented between 2003 and 2005. We analyse the impact of the reforms and its coincidence with an economic expansion on the efficiency of matching out of unemployment. Especially focussing on searcher heterogeneity, we estimate a system of stock‐flow matching functions for short‐term and long‐term unemployment (three‐stage least squares) on the basis of administrative data. In sum, the reforms increased matching efficiency for both groups, but the effect was larger for the long‐term unemployed. The interaction of reforms and economic expansion, however, was not influential.
ISSN:0036-9292
1467-9485
DOI:10.1111/j.1467-9485.2011.00570.x