Economics Seminar Series: Christian Merkl, Friedrich-Alexander-Universität, Erlangen-Nürnberg

Title: Hartz IV and the Decline of German Unemployment: A Macroeconomic Evaluation

2018.05.14 | Bodil Krog

Date Tue 25 Sep
Time 14:15 15:30
Location Fuglesangs Allé 4, 8210 Aarhus V, building 2632(L), room 242

Presenter: Christian Merkl, Friedrich-Alexander-Universität, Erlangen-Nürnberg

Title: Hartz IV and the Decline of German Unemployment: A Macroeconomic Evaluation

Abstract: This paper proposes a new approach to evaluate the macroeconomic effects of the Hartz IV reform in Germany, which reduced the generosity of long-term unemployment benefits. We propose a model with different unemployment durations, where the reform initiates both a partial effect and an equilibrium effect. The relative importance of these two effects and the size of the partial effect are estimated based on the IAB Job Vacancy Survey. Our novel methodology provides a solution for the existing disagreement in the macroeconomic literature on Hartz IV. We find that Hartz IV was a major driver for the decline of Germany’s unemployment. In addition, we contribute to the literature on partial and equilibrium effects of unemployment benefit changes. 

Host: Bastian Schulz

Organizer: Jonas Maibom

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Economics Seminar Series
14304 / i32