German Unemployment Rate Research Articles

Unemployment decline in East Germany: the role of demography

This paper deals with the relation between population aging and the decline of unemployment in East Germany. For the analysis I adapt a direct and an indirect approach covering the years from 1996 to 2014. The direct approach quantifies the extent to which changes in the unemployment rate can be attributed to changes in the composition of the labor force. It includes a decomposition of the East German unemployment rate into changes in the workforce’s age structure, labor market participation, and age-specific unemployment rates. The indirect approach centers on the effects of changing cohort sizes on the unemployment rate and involves spatial panel regressions on the small-scale regional level. Results of the direct approach show that changes in the age structure of the workforce exert only a minor impact on the unemployment rate, whereas results of the indirect approach attest aging a significant impact on unemployment. Evidently, demographic change seems to affect unemployment primarily through a general increase of competition for labor that is further fostered by feedback effects between regions than through a direct change of the age structure. I conclude that the declining unemployment rate in East Germany is indeed affected by aging as evidenced by a declining youth share and an increasing old-age share. This indicates that a reversed cohort crowding effect has taken place.

The German unemployment since the Hartz reforms: Permanent or transitory fall?

The Hartz reforms were designed to make the German labor market more flexible in order to reverse the increasing trend of unemployment. This paper employs unobserved components models in order to distinguish permanent from transitory movements in the German unemployment rate. Our results show that the permanent component of the German unemployment was reduced in the range of 1.1 and 2.6 percentage points after the Hartz reforms.

The ins and outs of German unemployment: a transatlantic perspective

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.

Germany, Far And Near

At first glance, Germany appears, economically, to be quite unusually successful. Despite the budgetary and financial crises affecting the other nations of the European Union, the German unem-ployment rate is declining. It has a positive export balance, and its own budgetary deficit is shrinking due to increases in national income and tax revenues. Indeed, the other European nations expect a relatively prosperous Germany to take more financial responsibility for the Union as a whole—a view not supported by a German majority. That majority thinks that the German welfare state, with health insurance and retirement pensions and considerable investment in culture and education as well as material infrastructure, is exclusively a national achievement. Having recently spent billions on domes-tic income transfers (from West to East after reunification in 1990), the German citizenry prefers to keep its money in German pockets. Disdain for Eastern and Southern Europeans serves as a solvent, washing away attention to internal differences in income and life chances that might otherwise move to the center of German politics. A truly yellow national popular press, television commentators as clueless as those we know here, and rigid professors of economics insist on austerity as the one true path to economic salvation. Austerity is prescribed not only for other Europeans, but for those Germans so improvident as not to belong to the upper income groups.

THE TRUTH ABOUT THE GERMAN “JOB MIRACLE”: A REPORT ON THE INNER LIFE OF A “JOB WONDERLAND”

Everywhere in the industrialized and postindustrial countries of the West, unemployment is very high due to the worldwide economic crisis, in some cases 10 percent or more. In early July 2010 the U.S. unemployment rate was 9.5 percent, yet Germany has apparently been enjoying a minor “job miracle.” In June 2010 the German unemployment rate was 7.5 percent, with only 3,153,000 officially unemployed—the rate has not been this low in June for eighteen years. How can it be that almost all countries are currently experiencing high unemployment rates, while Germany is enjoying a comparatively low rate? This article examines the reasons for and background of this apparent “job miracle.” These include economic developments, statistical idiosyncrasies, such as “improving” the numbers, the liberalization of the labor market, and also psychological factors. That there really is a German “job miracle” can definitely be challenged.

Are There Adverse Real Effects from Monetary Policy Coordination? Some Evidence from Austria, Belgium and the Netherlands

A central hypothesis and concern of some skeptics of European monetary union is that monetary policy coordination to secure a peg to the German mark (DM) will tie real economic performance, especially the unemployment rate, to that in Germany. Evidence on this hypothesis can be found in Austria, Belgium and the Netherlands, however, where currencies have been tightly pegged to the mark since 1979, 1986 and 1984, respectively. This paper reviews the theoretical link between a country's real performance and its coordination with foreign economic policy. It uses the three countries' Phillips curves to gauge real economic performance; it tests whether Phillips curve parameters have shifted adversely following the introduction of the DM-peg and whether any such shift is related to German unemployment rate movements. The article concludes that coordination does not have adverse economic effects on real economic performance.

A permanent-transitory decomposition for ARFIMA processes

The purpose of this paper is to present a decomposition into a trend or permanent component and a cycle or transitory component of a time series that follows a nonstationary (d> 1 2 ) autoregressive fractionally integrated moving average ARFIMA( p, d, q) model. The decomposition depends only on past data and is thus computable in real time. We also provide an algorithm for the efficient and exact computation of the decomposition. The empirical applicability of our decomposition is illustrated with a study of German unemployment rate series.a

Is there a causal relationship between exchange rate volatility and unemployment?

In his article on “Germany's Stake in Exchange Rate Stability” (INTERECONOMICS, September/October 1996), Daniel Gros recently wrote that, as he sees it, the exchange rate volatility of the D-Mark against the other European currencies has a causal impact on the German unemployment rate. In the following it is examined whether Granger causality tests support this view and whether it is possible to infer from this that the establishment of a monetary union in Europe will contribute to a significant easing of unemployment problems.

Time‐series forecasting of the German unemployment rate

AbstractThe purpose of the paper is to investigate the accuracy of forecasts derived from univariate and multivariate time‐series models. An iterative method to adjust for impact assessment in univariate ARIMA models is discussed and illustrated for the German unemployment rate. Finally, we also examine the pros and cons of the impact assessment model in comparison with VAR models.