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The German Hartz IV reform has been a far-reaching labour market reform which reduced unemployment benefit generosity. The encompassing economic evaluation tends to confirm that the reform was an initial spark for the improvement of German labour market performance. At the same time, welfare state scholars have recently expressed concerns that such reforms may have far-reaching and detrimental political effects. In this article, I contribute to this discussion and analyse the political effects of Hartz IV including decreasing satisfaction with democracy, decreasing political participation and an increase of protest voting and political polarization. To identify the effect of the reform, I rely on bi-weekly representative survey data and exploit the announcement of the Hartz reforms as natural experiment. Comparing political attitudes of persons interviewed immediately before and after the announcement in regression analyses confirms that there was a sharp drop in satisfaction with democracy and the intention to participate in the next election, as well as increasing affinity to non-established and left-wing parties. Supplementary analyses show that the effect is stronger for unemployed workers who are more directly affected by the reform. These results are robust to different model specifications and estimation techniques. Moreover, placebo tests for past and previous years refute the concern that the effect is driven by other factors such as calendar time effects. These findings indicate that the political consequences of welfare state retrenchment go far beyond electoral punishment. This is possibly more relevant today than ever before as the current increase of populist parties substantially impedes the functioning of political systems in modern democracies. [ABSTRACT FROM AUTHOR]

We sharpen tests for ‘discouragement’ and ‘added worker’ effects by splitting the explanatory variable – the unemployment rate – into a short-term component and a long-term component. While short-term unemployment (STU) might not result in additional workers on a large scale, long-term unemployment (LTU) reduces household income more, increasing the need for additional income. On the other hand, it may discourage older workers for psychological and sociological reasons. Applying our model to the German labour market, these hypotheses could be confirmed. Even for men, about whom only a few empirical studies on this issue are available, distinguishing between STU and LTU reveals added worker as well as discouragement effects. [ABSTRACT FROM PUBLISHER]

Summary During May and June 2013 heavy rains caused disastrous floods in several countries in Europe. In this study we use a new high-resolution model of the German economy to simulate the post-disaster economic shock of the flood. Due to the heavy reliance of modern economies on inter regional supply chains, substantial economic impacts are felt in states and industries outside the flooded area. Cessation of export from one industry, for example in Bayern, in the wake of the flood affects many other industries and regions. Trade links are broken immediately and cause shortages. Supply restrictions from those industries spread further, reducing production possibilities in the national and global economy. Industry- and region specific direct impacts are estimated from time series data about compensations of lost working hours from social insurance schemes in the case of external events such as business cycles and natural disasters. We estimate the total indirect loss of production possibilities that affect in particular the motor vehicle and food industries in Baden-Württemberg, Nordrhein-Westfalen and Niedersachsen, but also foreign production, to be €6.2 billion. Regions and industries outside the flooded area experience around €400 million of the loss. We find the economic impact of the flood to be much higher as in previous studies and mitigation is more likely to be considered if this effect is taken into account. [ABSTRACT FROM AUTHOR]

This article explores how institutional differences matter to the quality of a nation’s jobs; job quality is conceived as a dimension of a national economy’s social performance and thus defined in accordance with civic principles. Focus is on the two archetypical varieties of capitalism, the United States and Germany. Using data from a 2009 telephone survey of U.S. and German workers, we find that the overall attainment of civic principles, as perceived by workers, is no different in Germany than in the United States, even though the German institutional environment should be more conducive to them. This is due to higher worker expectations in Germany and a tendency for employer practices to compensate for the weaker (liberal) institutional environment in the United States. Once these are controlled, German workers report substantially more positive outcomes. We find that institutional differences also matter in how various employer practices are adopted and hence have indirect as well as direct implications. [ABSTRACT FROM PUBLISHER]

Using the German General Social Survey (ALLBUS) 2008, I investigate how looks affect an individual's labor supply decision. My results are, by and large, in line with predictions derived from the neoclassical model of labor supply. Applying regular probit, bivariate probit, Tobit and Heckman selection regression models, I find that good looks go hand in hand with higher employment probabilities and more hours of market work. Furthermore, physical attractiveness is positively associated with spousal income and spousal employment. Hence, beauty appears to affect labor supply decisions both directly and through the marriage market. [ABSTRACT FROM AUTHOR]

In this study, we examine the gender differences in formal and informal volunteering using data from a Time Use Survey in Germany. Our study finds strong evidence that women are more likely to volunteer formally if they also volunteer informally, suggesting that the decisions are complementary. However, for men the decisions to volunteer formally and informally are not significantly related. Moreover, we find that gender differences in labour force participation cannot explain our results. [ABSTRACT FROM AUTHOR]

The article discusses the employment of women in armaments factories in the region of Mecklenburg, Germany, during the First World War. The author seeks to investigate whether and how women's war work contributed to women's emancipation in the early twentieth century. Topics considered include labor shortages during and due to the war, their effect on traditional attitudes toward the sexual division of labor, and a comparison of working conditions and industrial relations in small-sized factories.

We investigate to what extent convergence in production levels per worker has been achieved in Germany since unification. To this end, we model the distribution of GDP per employee across German districts using two-component normal mixtures. While in the first year after unification, the two-component distributions were clearly separated and bimodal, corresponding to the East and West German districts, respectively, in the following years they started to merge showing only one mode. Still, using the recently developed EM-test for homogeneity in normal mixtures, the hypothesis of just a single normal component for the whole distribution is clearly rejected for all years. A Posterior analysis shows that about a third of the East German districts were assigned to the richer component in 2006, thus catching up to levels of the West. The growth rate of a mover district is about 1% point higher than the growth rate of a non-mover district which had the same initial level of GDP per employee. [ABSTRACT FROM AUTHOR]

Using German microdata and a quasi-natural experiment, we provide evidence on how households respond to an increase in uncertainty. We find that household saving increases significantly following the increase in political uncertainty observed in the run-up to the 1998 German general election. We also find evidence of a labor supply response by workers who can use the margin offered by part-time employment. Our results are suggestive of the economic effects of "wars of attrition": when political disagreement leads to delays in adopting a reform or the possibility that earlier reforms may be revoked, the increased uncertainty could slow the economy. [ABSTRACT FROM AUTHOR]

Analyses in comparative political economy have the potential to contribute to understanding health inequalities within and between societies. This article uses a varieties of capitalism approach that groups high-income countries into coordinated market economies (CME) and liberal market economies (LME) with different labor market institutions and degrees of employment and unemployment protection that may give rise to or mediate work-related health inequalities. We illustrate this approach by presenting two longitudinal comparative studies of unemployment and health in Germany and the United States, an archetypical CME and LME. We find large differences in the relationship between unemployment and health across labor-market and institutional contexts, and these also vary by educational status. Unemployed Americans, especially of low education or not in receipt of unemployment benefits, have the poorest health outcomes. We argue for the development of a broader comparative research agenda on work-related health inequalities that incorporates life course perspectives. [ABSTRACT FROM AUTHOR]

This paper aims to quantify the welfare effects of progressive pension arrangements in Germany. Starting from a purely contribution-related benefit system, we introduce basic allowances for contributions and a flat benefit fraction. Since our overlapping-generations model takes into account variable labor supply, borrowing constraints as well as stochastic income risk, we can compare the labor supply, the liquidity and the insurance effects of the policy reform. Our simulations indicate that it would be optimal to introduce a flat benefit share of 50 percent and a basic allowance that amounts to 30 percent of average income. Such a reform would yield an aggregate efficiency gain of 3.3 percent of resources. [ABSTRACT FROM AUTHOR]

During the past decade, prevailing scholarship has portrayed France and Germany as suffering from a persistent syndrome of ‘welfare without work’ entailing a vicious circle between stubbornly high rates of unemployment and non-wage labor costs. Scholars blame this disease on dysfunctional political arrangements, deep insider-outsider cleavages and failed systems of social partnership. As a result, the two countries are said to be more or less permanently mired in a context of high unemployment that is highly resistant to remediation. This article departs from this conventional wisdom in two important respects. First, it argues that France and Germany have undertaken major reforms of their labor market policies and institutions during the past decade and remediated many of their longstanding employment traps. Second, it shows that the political arrangements that adherents of the ‘welfare without work’ thesis identify as reasons for sclerosis have evolved quite dramatically. The article supports these arguments by exploring some of the most significant recent labor market reforms in the two countries, as well as the shifting political relationships that have driven these changes. In both countries, recent labor market reforms have followed a trajectory of ‘buttressed liberalization’. This has involved, on the one hand, significant liberalization of labor market regulations such as limits on overtime and worker protections such as unemployment insurance. On the other hand, it has entailed a set of supportive, ‘buttressing’ reforms involving an expansion of active labor market policies and support for workers' efforts to find jobs. The article concludes that these developments provide reasons for optimism about the countries' economic futures and offer important lessons about how public policy can confront problems of labor market stagnation. [ABSTRACT FROM AUTHOR]

In this paper, we estimate the effect of different macro and micro variables on the distribution of unemployment duration in West Germany using censored quantile regressions. We analyze unemployment periods of more than 91,000 observations from the years 1981 to 1997 drawn from the IAB employment subsample. The latter is an administrative data set that is representative with respect to the socially insured workforce. Surprisingly, we find that the educational degree and variables indicating the macroeconomic environment such as the unemployment rate have a weak effect only. On the other hand, variables reflecting the (un-)employment history of an individual such as the length of tenure, recall to the same employer in the past, recent unemployment, and the position in the population income distribution before unemployment have the strongest effects on unemployment duration. We conclude that work history variables are the ones most suitable in characterizing the unemployment duration of an individual. From a methodological point of view, it is interesting that some regression coefficients have a different sign depending on the quantiles of the unemployment duration distribution. This clearly is a violation of the classical proportional hazard assumption which is very common in unemployment duration analysis. [ABSTRACT FROM AUTHOR]

The current state of play regarding the interaction of labour market and regional economics, in particular the New Economic Geography, was discussed at an international workshop organised by the DIW Berlin, Germany. New theoretical ideas and the more powerful sets of microdata available to scientists today signal an increasing significance of this area of research. An important insight recognised at this workshop was that the labour market does not exist. Individual labour markets develop in very different ways. Wage levels and employment opportunities depend on the regional concentration of these markets. Empirical studies show, for example, that those with higher qualifications in particular benefit from the strength of economic activity in a region. Theoretical studies have concluded that investment in human capital is worthwhile particularly in markets with a high degree of concentration. Labour market policy would be ill advised to rashly follow economic policy recommendations emphasising only regionally undifferentiated measures.

The persistence of high unemployment has been one of the most important economic problems in Germany for many years. The rise in the unemployment rate was associated with a substantial increase in the share of long-term unemployed people, that is those who have already been unemployed for at least one year. The average monthly hazard rate from unemployment, that is the unemployment outflow in a given month relative to the stock of unemployed people at the end of the previous month, declined from about 30 percent at the beginning of the early eighties to about 15 percent in the mid-eighties, increased somewhat during the strong economic upswing in the mid-eighties and declined again strongly after the recession at the beginning of the nineties. According to the Organization for Economic Cooperation and Development almost every second unemployed person has been unemployed for more than a year in Germany, which is about the average in the European Union. One popular hypothesis for the observed decline in the hazard rate is that an individual's employment prospects deteriorate with the duration of the unemployment spell, which is termed negative duration dependence in the literature. An individual's human capital may deteriorate during unemployment and this effect may be the stronger the longer unemployment lasts.

The article discusses shock therapy of Eastern Europe's economy which occurred after the collapse of Berlin Wall, in Germany, that ended communism in Eastern Europe. Post-communism's promise of transition happened rapidly in the former East Germany only where the Treuhand agency had sold only four thousand of the ten thousand state enterprises of its control, and more than a third of the work force were un- or underemployed. According to the article, Eastern Europe should face the obligation ahead of them, that is to play a role in encouraging the recovery of the economy. Leading a recovery needed an exact commitment in demanding something that the balanced-budget shock therapist have been unwilling to recommend.

The article discusses the lack of jobs available in Germany at lower income levels compared to other levels. Consequently, the lower group causes a proportional drain on government relief funds. For some would-be workers, given the subsidies, it may no longer "worth" working or seeking employment. The authors investigation, however, finds no such disincentives or negative effects on the low supply of labor among lower income groups.

The article presents information about the response of West German trade associations to an influx of immigrant workers from Italy, Greece and Spain. It is noted that migrant laborers from the Ukraine came under different circumstances in 1956 and are to be considered separately. The socio-political problems associated with wandering labor are discussed, including a possible scarcity of jobs for West Germans and potentially unfair working conditions for immigrant Italians.