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Unemployment Compensation and Wages: Evidence from the German Hartz Reforms*

* This paper has been replicated

Author

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  • Arent Stefan

    (Ifo Institute, Branch Dresden, Einsteinstraße 3, 01069 Dresden, Germany)

  • Nagl Wolfgang

    (fo Institute, Branch Dresden, Einsteinstraße 3, 01069 Dresden, Germany)

Abstract

Using the introduction of fixed unemployment assistance in Germany in 2005 as a unique natural experiment, we find strong evidence that decreased unemployment compensation has an adverse effect on wages. We use micro panel data to identify and estimate the effect of this structural break. In eastern and western Germany, the relative effect is higher for women. In western Germany, the relative effect increases with skill level. In eastern Germany, there is no clear skill-specific pattern.

Suggested Citation

  • Arent Stefan & Nagl Wolfgang, 2013. "Unemployment Compensation and Wages: Evidence from the German Hartz Reforms," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 233(4), pages 450-466, August.
    • Handle: RePEc:jns:jbstat:v:233:y:2014:i:4:p:450-466
    DOI: 10.1515/jbnst-2013-0402
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gadatsch, Niklas & Stähler, Nikolai & Weigert, Benjamin, 2016. "German labor market and fiscal reforms 1999–2008: Can they be blamed for intra-euro area imbalances?," Journal of Macroeconomics, Elsevier, vol. 50(C), pages 307-324.
    2. Gianna C. Giannelli & Ursula Jaenichen & Thomas Rothe, 2016. "The evolution of job stability and wages after the implementation of the Hartz reforms [Die Entwicklung von Beschäftigungsstabilität und Löhnen seit Einführung der Hartz-Reformen]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(3), pages 269-294, November.
    3. Philip Jung & Anke Hassel & Robert Habeck & Matthias Knuth & Alexander Spermann & Hans Peter Grüner & Maximilian Joseph Blömer & Clemens Fuest & Andreas Peichl, 2019. "Reformvorschläge für den Arbeitsmarkt: Ist Hartz IV noch zukunftsfähig?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(06), pages 03-25, March.
    4. Weskott Johannes B. D., 2020. "Unemployment Compensation and Wages: A Difference-in-Differences Approach to Assessing the Wage Effects of the German Hartz Reforms," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(1), pages 89-110, January.
    5. Regina T. Riphahn & Christoph Wunder, 2016. "State dependence in welfare receipt: transitions before and after a reform," Empirical Economics, Springer, vol. 50(4), pages 1303-1329, June.
    6. Wolfgang Nagl & Michael Weber, 2014. "Unemployment compensation and unemployment duration before and after the German Hartz IV reform," ifo Working Paper Series 186, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Ludsteck Johannes & Seth Stefan, 2014. "Comment on ‘‘Unemployment Compensation and Wages: Evidence from the German Hartz Reforms’’ by Stefan Arent and Wolfgang Nagl," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(5), pages 635-644, October.
    8. Kraft, Kornelius & Lammers, Alexander, 2021. "The Effects of Reforming a Federal Employment Agency on Labor Demand," IZA Discussion Papers 14629, Institute of Labor Economics (IZA).
    9. Beissinger, Thomas & Chusseau, Nathalie & Hellier, Joël, 2016. "Offshoring and labour market reforms in Germany: Assessment and policy implications," Economic Modelling, Elsevier, vol. 53(C), pages 314-333.
    10. Winker Peter, 2016. "Editorial Announcement," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(1), pages 1-2, February.
    11. Kurt Kratena & Mark Sommer, 2014. "Labour Market Policy and Environmental Fiscal Devaluation: A Cure for Spain in the Aftermath of the Great Recession?," WIFO Working Papers 476, WIFO.
    12. Viktor Steiner, 2017. "The labor market for older workers in Germany [Der Arbeitsmarkt für ältere Arbeitnehmer in Deutschland]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 50(1), pages 1-14, August.
    13. Wolfgang Nagl, 2014. "Better Safe than Sorry? The Effects of Income Risk and Unemployment Risk on Wages," LABOUR, CEIS, vol. 28(3), pages 251-268, September.
    14. Sergei Hoxha & Alfred Kleinknecht, 2024. "When structural reforms of labor markets harm productivity. Evidence from the German IAB panel," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 541-554.

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    Replication

    This item has been replicated by:
  • Ludsteck Johannes & Seth Stefan, 2014. "Comment on ‘‘Unemployment Compensation and Wages: Evidence from the German Hartz Reforms’’ by Stefan Arent and Wolfgang Nagl," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(5), pages 635-644, October.

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