New Insights into Unemployment Duration and Post Unemployment Earnings in Germany

Authors


  • The authors thank two anonymous referees and the editor for helpful comments. We are grateful to Stefan Bender, Christina Wübbecke and the Employment Agency Mannheim for considerable help with the data, Xuan Zhang for sharing the program code and Eva Müller for research assistance. We thank Dragana Djurdjevic, Jenny Hunt, Stephan Klasen, Bruce Meyer, Kostas Tatsiramos, Klaus Wälde, two anonymous reviewers and the participants of numerous workshops and seminars for helpful comments or discussions on the paper. The authors gratefully acknowledge financial support by the German Research Foundation (DFG) through the research projects Microeconometric modelling of unemployment duration under consideration of the macroeconomic situation and Statistical modelling of errors in administrative labor market data which were carried out at the ZEW Mannheim. This work uses the IAB employment subsample 1975–2001 with anonymous and original variables. The delivery and use of the data are in compliance with §75 SGB X. The IAB does not take any responsibility for the use of its data.

Abstract

Building on non-stationary search theory (Mortensen, 1977; Van den Berg, 1990), this article estimates the effects of UB on unemployment durations and future earnings using unique administrative data in Germany. We apply censored Box–Cox quantile regression. Our results imply that the length of entitlement shows only a weak effect on unemployment duration for entitlement lengths up to 12 months and no effect on post unemployment earnings. There are noticeable effects on exits from unemployment for entitlement lengths above 12 months. A high wage replacement rate for low-wage earners is associated with a longer duration of unemployment and higher post unemployment earnings.

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