The impact of labor market reforms on income inequality: Evidence from the German Hartz reforms

Arbeitspapier

In this paper, I study the distributional consequences of the German Hartz reforms, a set of four comprehensive labor market reforms implemented in Germany between 2003 and 2005. I exploit regional variation in the intensity German counties were affected by the reforms to estimate the causal effect of the Hartz reforms on income inequality. My results suggest that the Hartz reforms have led to a small increase in income inequality. Testing for potential transmission channels, I find that the increase in inequality is partly due to a direct monetary impact of the last Hartz reform, Hartz IV, on the income of households relying on government transfers. Another part can be explained by a rise in the share of transfer recipients. In contrast, the Hartz reforms did not increase income inequality via a rise in labor supply or part-time work, via an increase in (full-time) wage inequality nor via an increase in the number of income earners per household.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ifo Working Paper ; No. 347

Classification and Topics

• Classification: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Labor Economics Policies ; Wage Level and Structure; Wage Differentials ; Mobility, Unemployment, and Vacancies: Public Policy
• Subject: Labor market policy ; income inequality ; wages ; Germany ; Hartz reforms

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Immel, Lea
• Event: Veröffentlichung
• (who): ifo Institute - Leibniz Institute for Economic Research at the University of Munich
• (where): Munich
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/231543
• Last update: 14.09.2027, 10:42 AM CEST