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Fixing the Leak: Unemployment Incidence before and after a Major Reform of Unemployment Benefits in Germany

Author

Listed:
  • Dlugosz Stephan

    (ZEW Centre for European Economic Research,Mannheim, Germany)

  • Wilke Ralf A.

    (Department of Economics at the University of York, PSI Policy Studies Institute London, and ZEW Centre for European Economic Research Mannheim,Mannheim, Germany)

  • Stephan Gesine

    (AB Institute for Employment Research and University of Erlangen-Nuremberg,Erlangen, Germany)

Abstract
We present first empirical results on the effects of a large scale reduction in unemployment benefit entitlement lengths on unemployment inflows in Germany. We show that this highly disputed element of the Hartz-Reforms in 2006 induced a rush of workers and firms to take advantage of the previous legislation in its last days. Furthermore, we find a considerable decline in transitions to unemployment and an increase in employment rates among older workers after the reform. Our results provide new evidence for the importance of changes in unemployment inflows for the analysis of changes in unemployment outflows.

Suggested Citation

  • Dlugosz Stephan & Wilke Ralf A. & Stephan Gesine, 2014. "Fixing the Leak: Unemployment Incidence before and after a Major Reform of Unemployment Benefits in Germany," German Economic Review, De Gruyter, vol. 15(3), pages 329-352, August.
    • Handle: RePEc:bpj:germec:v:15:y:2014:i:3:p:329-352
    DOI: 10.1111/geer.12014
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