Working Paper: CEPR ID: DP12846
Authors: Carlos Carrillo-Tudela; Andrey Launov; Jean Marc Robin
Abstract: In this paper we investigate the recent fall in unemployment, and the rise in part-time work, labour market participation, inequality and welfare in Germany. Unemployment fell because the Hartz IV reform induced a large fraction of the long-term unemployed to deregister as jobseekers and appear as non-participants. Yet, labour force participation increased because many unregistered-unemployed workers ended up accepting low-paid part-time work that was offered in quantity in absence of a universal minimum wage. A large part of the rise in part-time work was also due to the tax benefits Hartz II introduced to take up a mini-job as secondary employment. This has provided an easy way to top-up labour income staggering under the pressure of wage moderation. The rise in part-time work led to an increase in inequality at the lower end of income distribution. Overall we find that Germany increased welfare as unemployment fell.
Keywords: unemployment; part-time work; minijobs; non-participation; multiple job holding; income inequality; germany; hartz reforms
JEL Codes: J21; J31; J63; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Hartz reforms (J53) | fall in registered unemployment (J64) |
| Hartz reforms (J53) | deregistration as jobseekers (J68) |
| deregistration as jobseekers (J68) | non-participants in labor market (J49) |
| Hartz II reforms (J68) | increase in part-time jobs (J29) |
| increase in part-time jobs (J29) | increase in labor force participation (J21) |
| Hartz reforms (J53) | increase in income inequality (D31) |
| wage moderation (J38) | changes in unemployment (J64) |
| Hartz reforms + wage moderation (E69) | changes in unemployment (J64) |