The Effect of the Hartz Labor Market Reforms on Post-unemployment Wages, Sorting, and Matching

Arbeitspapier

We use linked longitudinal data on employers and employees to estimate how the 2003-2005 Hartz reforms affected the wages of displaced German workers after they returned to work. We also present a simple new method to decompose the wage effects into components attributable to selection on unobservables, and to changes in the way that displaced workers are sorted across firms and worker-firm matches upon re-employment. We find that the Hartz reforms substantially reduced the wages of displaced workers after their return to work. Women experienced smaller wage losses than men. For both sexes, over 80 percent of the increased wage loss was because displaced workers found re-employment in lower-wage firms after the reforms. A disproportionate share of these low-wage firms offer temporary employment services to other firms, and we document a large increase in post-displacement employment in the temporary work sector after the reforms. Sorting into worse matches with employers explains a smaller 5-9 percent of the wage loss experienced by men, and 12.5-23 percent of the female wage loss. Collectively, the sorting and matching channels explain almost all of the Hartz reforms' effect on post-displacement wages.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IZA Discussion Papers ; No. 13300

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Unemployment Insurance; Severance Pay; Plant Closings ; Unemployment: Models, Duration, Incidence, and Job Search ; Job, Occupational, and Intergenerational Mobility; Promotion ; Mobility, Unemployment, and Vacancies: Public Policy ; Labor Turnover; Vacancies; Layoffs ; Wage Level and Structure; Wage Differentials ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
• Thema: Hartz reforms ; displacement ; unemployment insurance ; reallocation ; sorting ; matching ; selection ; linked employer-employee data ; fixed effects

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Woodcock, Simon D.
• Ereignis: Veröffentlichung
• (wer): Institute of Labor Economics (IZA)
• (wo): Bonn
• (wann): 2020

Weitere Informationen

• Handle: http://hdl.handle.net/10419/223742
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ