Lessons learned from Germany's 2001 - 2006 labor market reforms [Elektronische Ressource] / vorgelegt von Irene Schumm, geb. Endres

Informations

• Publié par: julius-maximilians-universitat_wurzburg
• Publié le: 01 janvier 2009
• Nombre de lectures: 14
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Lessons Learned From Germany’s 2001-2006
Labor Market Reforms
Inaugural-Dissertation
zur Erlangung des akademischen Grades
eines Doktors der Wirtschaftswissenschaften an der
¨Wirtschaftswissenschaftlichen Fakultat
der Julius-Maximilians-Universita¨t Wur¨ zburg
vorgelegt von
Diplom-Volkswirtin Irene Schumm, geb. Endres
Wur¨ zburg, 30. April 2009Betreuer der Dissertation:
Prof. Dr. Klaus Wa¨ldeTo Marcel
and my parentsivContents
List of Figures ix
List of Tables xi
Abbreviations xii
1 Introduction 1
2 The Laws for Modern Services on the Labor Market in Germany 3
2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Hartz I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.1 New benchmarks of a suitable job . . . . . . . . . . . . . . . . . 5
2.2.2 Early notification . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.3 Reversal of the burden of proof . . . . . . . . . . . . . . . . . . 7
2.2.4 More differentiated sanction rules . . . . . . . . . . . . . . . . . 7
2.2.5 New rules for continuing education . . . . . . . . . . . . . . . . 8
2.2.6 Support of older workers . . . . . . . . . . . . . . . . . . . . . . 9
2.2.7 ‘Personal-Service-Agenturen’ . . . . . . . . . . . . . . . . . . . 9
2.2.8 Competition between integration measure providers . . . . . . . . 10
2.2.9 Controlling and bonus for good performance . . . . . . . . . . . 10
2.3 Hartz II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3.1 ‘Minijob’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3.2 ‘Midijob’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3.3 Starting a business by an ‘Ich-AG’ . . . . . . . . . . . . . . . . . 12
2.4 Hartz III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.4.1 Self-administration of the Employment Offices . . . . . . . . . . 13
2.4.2 Simplification of labor market policy instruments . . . . . . . . . 13
2.4.3 Changes in monetary benefits . . . . . . . . . . . . . . . . . . . 14
2.5 Hartz IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15vi CONTENTS
2.5.1 Flat unemployment assistance payments . . . . . . . . . . . . . . 15
2.5.2 ‘Job-Centers’ as contact points . . . . . . . . . . . . . . . . . . . 16
2.5.3 Suitable jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.5.4 One-Euro jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.5.5 Integration agreement . . . . . . . . . . . . . . . . . . . . . . . 17
2.5.6 Means tests for long-term unemployment benefits . . . . . . . . . 18
2.5.7 Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.6 Further changes before or after the Hartz reforms . . . . . . . . . . . . . 19
2.6.1 Job-AQTIV Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6.2 Changes in the benefit entitlement duration . . . . . . . . . . . . 20
2.7 Further developments and concluding remarks . . . . . . . . . . . . . . . 21
3 Unemployment benefits, distribution, and efficiency 23
3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2 Different strands of literature . . . . . . . . . . . . . . . . . . . . . . . . 27
3.2.1 Basics of modeling . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2.2 Basics of estimation . . . . . . . . . . . . . . . . . . . . . . . . 33
3.2.3 Literature on (optimal) UI systems . . . . . . . . . . . . . . . . . 36
3.3 The model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.3.1 Production, employment, and labor income . . . . . . . . . . . . 39
3.3.2 Optimal behavior . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.3.3 Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.4 Equilibrium properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.4.1 Individual (un)employment probabilities . . . . . . . . . . . . . . 44
3.4.2 Aggregate unemployment . . . . . . . . . . . . . . . . . . . . . 46
3.4.3 Functional forms and steady state . . . . . . . . . . . . . . . . . 47
3.5 Structural estimation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.5.1 Exit rates out of unemployment . . . . . . . . . . . . . . . . . . 48
3.5.2 Econometric model . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.5.3 Estimation results . . . . . . . . . . . . . . . . . . . . . . . . . . 54
3.6 Numerical solution I: the pre-reform steady state . . . . . . . . . . . . . 56
3.6.1 Equilibrium values in the pre-reform steady state . . . . . . . . . 56
3.6.2 Dynamics on the microeconomic level in steady state . . . . . . . 57
3.7 Numerical solution II: the effects of the reforms . . . . . . . . . . . . . . 60
3.7.1 Decreasing the unemployment assistance benefitsb . . . . . . 60UA
3.7.2 Decreasing the entitlement periods . . . . . . . . . . . . . . . . 63CONTENTS vii
3.7.3 Decreasing the unemployment assistance benefits b and theUA
entitlement periods simultaneously . . . . . . . . . . . . . . . . 65
3.7.4 Decreasing the unemployment assistance benefits b and theUA
entitlement periods simultaneously in a grown economy . . . . . 67
3.8 Numerical solution III: insurance and incentive effects of unemployment
assistance benefitsb . . . . . . . . . . . . . . . . . . . . . . . . . . . 69UA
3.8.1 An analytical benchmark for the pure insurance effects . . . . . . 69
3.8.2 Quantitative benchmark results of the insurance effects . . . . . . 70
3.8.3 Quantitative benchmark results of the insurance and the incentive
effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
3.9 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
3.10 Individual contributions to the sections of chapter 3 . . . . . . . . . . . . 77
4 Semi-Markov processes in labor market theory 79
4.1 Introduction and underlying setup . . . . . . . . . . . . . . . . . . . . . 79
4.2 Semi-Markov processes - the basics . . . . . . . . . . . . . . . . . . . . 82
4.2.1 Continuous-time Markov chains . . . . . . . . . . . . . . . . . . 83
4.2.2 Semi-Markov processes . . . . . . . . . . . . . . . . . . . . . . 85
4.2.3 Transition probabilities of Semi-Markov processes . . . . . . . . 87
4.3 Semi-Markov processes with two states . . . . . . . . . . . . . . . . . . 90
4.3.1 Computing transition probabilities for constant arrival rates . . . . 91
4.3.2 Computing transition probabilities for general arrival rates . . . . 92
4.4 Numerical solution of the transition probabilities . . . . . . . . . . . . . 93
4.4.1 Rectangle approximation . . . . . . . . . . . . . . . . . . . . . . 94
4.4.2 Trapeze approximation . . . . . . . . . . . . . . . . . . . . . . . 98
4.5 Numerical results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
4.5.1 Constant arrival rates - convergence to the analytical solution . . . 102
4.5.2 Duration-dependent arrival rates . . . . . . . . . . . . . . . . . . 110
4.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
5 Summary 115
A Appendix to chapter 3 117
A.1 Wage bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
A.2 Steady state solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
A.3 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
A.4 Initial equilibrium: predicting productivity and vacancy costs . . . . . . . 123viii CONTENTS
A.5 Determining the productivity of specific years . . . . . . . . . . . . . . . 124
A.6 Insurance effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
A.7 The insurance and incentive effects in steady state . . . . . . . . . . . . . 126
A.7.1 Steady state solution for the insurance effects . . . . . . . . . . . 126
A.7.2 Steady state solution for the insurance and incentive effects . . . . 127
A.8 The Matlab code for comparative statics . . . . . . . . . . . . . . . . . . 130
A.8.1 Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
A.8.2 Running the programs . . . . . . . . . . . . . . . . . . . . . . . 130
A.8.3 The solution structure of the programs . . . . . . . . . . . . . . . 136
A.9 Description of the functions using numerical integration . . . . . . . . . . 138
A.9.1 muebar.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
A.9.2 smcProb.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
A.9.3 smcPuu.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
A.9.4 unemployment.m . . . . . . . . . . . . . . . . . . . . . . . . . . 140
A.9.5 SocialWelf.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
B Appendix to chapter 4 143
B.1 The limiting distribution of a Semi-Markov process . . . . . . . . . . . . 143
B.2 The transition probabilities for the trapeze method . . . . . . . . . . . . . 144
B.3 The Matlab code for SMP transition probabilities . . . . . . . . . . . . . 145
B.3.1 Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
B.3.2 Running the program . . . . . . . . . . . . . . . . . . . . . . . . 145
Bibliography 147List of Figures
2.1 Maximum entitlement duration for UI benefits . . . . . . . . . . . . . . . 21
3.1 Non-parametric hazard functions . . . . . . . . . . . . . . . . . . . . . . 49
3.2 Microeconomic variables over the unemployme