- A. Details on the Hartz Reforms In response to rising unemployment in the early 2000s, the Hartz commission developed recommendations for the German labour market. These proposals were implemented gradually between 2003 (Hartz I and Hartz II) and 2005 (Hartz IV). According to Jacobi and Kluve (2006), the Hartz reforms had three main goals: (1) increasing the effectiveness and efficiency of labour market services, (2) activating the unemployed and (3) boosting labour demand by deregulating labour markets. Under the concept of “demanding and supporting†(Fordern und Fördern), these four reforms radically restructured the German labour market: Hartz I (in action since 01/01/2003): This reform facilitated the employment of temporary workers. Additionally, vouchers for on-the-job training were introduced.
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- ——— (2016): “The Employment Effect of Reforming a Public Employment Agency,†European Economic Review, 84, 140–164.
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- As the number of suitable applicants for Germany is available from 1992 onwards, we restrict our sample range from 1992 to 2015. Since the aggregate sample range is quite short to conduct time series analysis, we additionally calculate the time series at the federal state and industry level. We aggregate the inverse of the number of suitable applicants by taking mean values. Following Klinger and Rothe (2012, p.17), we add the Status quo of the data as of January 2016. This corresponds to the available pre-Hartz period. city state Bremen to the neighbouring state Lower Saxony to avoid spatial correlation.
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- Hartz II (in action since 01/01/2003): Introduction of new types of marginal employment with low income such as Minijobs (up to 450 euros per month, exempted from the income tax) and Midijobs (income up to 850 euros per month, reduced social security contributions). Furthermore subsidies for business start ups of unemployed were introduced.
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- Hartz III (in action since 01/01/2004): The core element of Hartz III was the restructuring of the Federal Employment Agency. The Federal Employment Agency was divided into a headquarter, regional directorates and local job center. Those local job center are now managed via a target agreement. Since Hartz III, all claims of an unemployed person are processed by the same case worker (support from a single source) and an upper limit on the number of cases handled was introduced. Furthermore, a special focus was put on long-term unemployed and unemployed who are older than fifty years. In addition, market elements for private placement services and providers of training measures were introduced.
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- While this is more than double the amount required under individual Nash bargaining, it is similar to the reduction used by Krebs and Scheffel (2013) and Krause and Uhlig (2012) (for low-skilled workers). Figure C.1 shows that otherwise the model reaction is virtually unchanged. 0 10 20 30 Quarter -25 -20 -15 -10 -5 Percent Unemployment Rate 0 10 20 30 Quarter Percent Selection Rate 0 10 20 30 Quarter Percent Contact Rate 0 10 20 30 Quarter Percent Job-Finding Rate
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