| Description |
1 online resource (86 pages) |
| Series |
IMF working paper, 1018-5941 ; WP/17/87 |
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IMF working paper ; WP/17/87.
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| Contents |
Cover; Contents; 1. Introduction; 2. German Labor Market Reforms 2003-2005; 2.1 Historical Background; 2.2 Hartz III Reform; 2.3 Hartz IV; 2.4 Time Series Evidence; 3. Model; 3.1 Workers; 3.2 Firms; 3.3 Equilibrium; 3.4 Equilibrium Characterization; 3.5 Computation and Tractability; 4. Cost of Recessions; 4.1 Welfare Cost of Recessions; 4.2 Output Cost of Recessions; 4.3 A Decomposition; 4.4 Labor Market Institutions and the Cost of Recessions; 5. Calibration; 5.1 General Specifications; 5.2 Search Technology and Mean Transition Rates; 5.3 Search Preferences and Search Elasticity |
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5.4 Skill Loss During Unemployment5.5 Wage Growth and Wage Risk; 5.6 Unemployment Benefits; 5.7 Discount Factor and Cost of Financial Intermediation; 5.8 Cyclical Variations in Job Finding and Job Destruction Rates; 5.9 Unemployment and Output Dynamics during Recessions; 6. Quantitative Results; 6.1 Reform Effects on Model Parameters; 6.2 Long-Run Reform Effects on Job Finding Rates and Unemployment; 6.3 Reform Effects on Dynamic Response to Recession Shock; 6.4 Output Cost of Recessions; 6.5 Welfare Cost of Recessions; 7. Robustness Analysis; 7.1 Changes in Calibration Targets |
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7.2 Search and Matching with Vacancy Posting7.3 Wedge between Micro-and Macro-Elasticity; 7.4 Unemployment Insurance and Match Quality; 8. Conclusion; References; Tables; 1. Output Cost of Recessions; 2. Welfare Cost of Recessions; 3. Output Cost of Recessions -- Diamond-Mortensen-Pissarides; Figures; 1. Output during Pre-Reform Recessions and Great Recession; 2. Average Net Replacement Rate 201-2010; 3. Quarterly Job Finding Rates by Duration of Unemployment Spell 2000-2011; 4. Beveridge Curve 2000-2015; 5. Unemployment Rate 1970-2015 |
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6. Cyclical Unemployment during Pre-Reform Recessions: Data and Model7. Output during Pre-Reform Recessions: Date and Model; 8. Cyclical Unemployment during Pre-Reform and Post-Reform Recessions; 9. Output during Pre-Reform and Post-Reform Recessions |
| Summary |
This paper studies the effect of two labor market institutions, unemployment insurance (UI) and job search assistance (JSA), on the output cost and welfare cost of recessions. The paper develops a tractable incomplete-market model with search unemployment, skill depreciation during unemployment, and idiosyncratic as well as aggregate labor market risk. The theoretical analysis shows that an increase in JSA and a reduction in UI reduce the output cost of recessions by making the labor market more fluid along the job finding margin and thus making the economy more resilient to macroeconomic shocks. In contarst, the effect of JSA and UI on the welfare cost of recessions is in general ambiguous. The paper also provides a quantitative appliation to the German labor market reforms of 2003-2005, the so-called Hartz reforms, which improved JSA (Hartz III reform) and reduced UI (Hartz IV reform). According to the baseline calibration, the two labor market reforms led to a substantial reduction in the output cost of recessions and a moderate reduction in the welfare cost of recessions in Germany |
| Bibliography |
Includes bibliographical references |
| Notes |
Print version record |
| Subject |
Labor market.
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Employment (Economic theory)
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employing.
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BUSINESS & ECONOMICS -- Labor.
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POLITICAL SCIENCE -- Labor & Industrial Relations.
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Labor market
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| Form |
Electronic book
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| Author |
Scheffel, Martin, author
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| ISBN |
9781475592467 |
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1475592469 |
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