Abstract
This article decomposes fluctuations in the German unemployment rate into changes in inflows (job separation) and outflows (job finding). For this purpose, we construct and examine monthly labour market transition rates from the West German sample of the SOEP (and the CPS) for the period 1984–2009. We explicitly take account of the low level of labour market transition rates in Germany. Our article shows that in West Germany, changes in the inflow rate are more important (about 60%) than changes in the outflow rate, whereas in the USA close to 80% are due to changes in the outflow rate.
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