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Income Support Systems, Labor Market Policies and Labor Supply: The German Experience

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  • Caliendo, Marco

    (University of Potsdam)

Abstract
In view of the demographic trends, most EU countries face the problem of a declining work force in the future. Understanding the interaction between income support systems (such as unemployment benefits, social assistance, early retirement and pension systems) and total labor supply is of crucial importance to combat problems and ensure economic growth in the future. The German labor market has been plagued by high and persistent unemployment in the last two decades in combination with a relatively low labor force participation of women. This created a situation where labor market reforms were unavoidable. The speed and depth of the reforms are remarkable, mainly aimed at activating people by increasing their incentives to take up work. The aim of this paper is to give a brief overview of the German income support systems and labor market polices, their recent reforms and – where already possible – effects of these reforms. Overall, Germany seems to be on the right track. The recent reforms helped to tackle some labor market problems but also created high political unrest. It remains to be seen how future governments react to worsened economic conditions in light of these experiences.

Suggested Citation

  • Caliendo, Marco, 2009. "Income Support Systems, Labor Market Policies and Labor Supply: The German Experience," IZA Discussion Papers 4665, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4665
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    References listed on IDEAS

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    Cited by:

    1. Kerstin Bruckmeier & Katrin Hohmeyer & Stefan Schwarz, 2018. "Welfare receipt misreporting in survey data and its consequences for state dependence estimates: new insights from linked administrative and survey data," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-21, December.
    2. Caliendo, Marco & Künn, Steffen, 2011. "Start-up subsidies for the unemployed: Long-term evidence and effect heterogeneity," Journal of Public Economics, Elsevier, vol. 95(3), pages 311-331.
    3. Ulf Rinne & Arne Uhlendorff & Zhong Zhao, 2013. "Vouchers and caseworkers in training programs for the unemployed," Empirical Economics, Springer, vol. 45(3), pages 1089-1127, December.
    4. Christoph Wunder & Regina T. Riphahn, 2014. "The dynamics of welfare entry and exit amongst natives and immigrants," Oxford Economic Papers, Oxford University Press, vol. 66(2), pages 580-604.
    5. Bruckmeier, Kerstin & Hohmeyer, Katrin & Schwarz, Stefan, 2018. "Welfare receipt misreporting in survey data and its consequences for state dependence estimates: new insights from linked administrative and survey data," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 52(1), pages 1-16.
    6. Werner Eichhorst, 2015. "The Unexpected Appearance of a New German Model," British Journal of Industrial Relations, London School of Economics, vol. 53(1), pages 49-69, March.
    7. Ulf Rinne & Klaus Zimmermann, 2012. "Another economic miracle? The German labor market and the Great Recession," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-21, December.
    8. Anders, Forslund & Fredriksson, Peter, 2009. "Income support systems, labour supply incentives and employment – some cross-country evidence," Working Paper Series, Center for Labor Studies 2010:3, Uppsala University, Department of Economics.
    9. Bruckmeier, Kerstin & Hohmeyer, Katrin & Schwarz, Stefan, 2018. "Welfare receipt misreporting in survey data and its consequences for state dependence estimates: new insights from linked administrative and survey data," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 52(1), pages .16(1-21).
    10. Kolluru Mythili & Hyams-Ssekasi Denis & Rao K.V.Ch.Madhu Sudhana, 2021. "A Study of Global Recession Recovery Strategies in Highly Ranked GDP EU Countries," Economics, Sciendo, vol. 9(1), pages 85-105, June.
    11. Mosthaf, Alexander, 2011. "Low-wage jobs - stepping stones or just bad signals?," IAB-Discussion Paper 201111, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    12. repec:iab:iabjlr:v:52:i:1:p:art.16 is not listed on IDEAS
    13. Wunder, Christoph & Riphahn, Regina, 2013. "Welfare transitions before and after reforms of the German welfare system," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79715, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    labor force participation; labor supply; unemployment; benefit systems; public policy;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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