Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240587 
Authors: 
Year of Publication: 
2021
Series/Report no.: 
Hohenheim Discussion Papers in Business, Economics and Social Sciences No. 05-2021
Publisher: 
Universität Hohenheim, Fakultät Wirtschafts- und Sozialwissenschaften, Stuttgart
Abstract: 
From the early 1990s until 2005 the unemployment rate rose in Germany from 7.3% to 11.7%. While the unemployment rate reached its peak in 2005, it decreased steadily in the following years. On the one hand, the fourth stage of the German labor market reform (Hartz IV) was implemented in 2005 with the intent to cut the unemployment rate. On the other hand, the productivities in Germany and Eastern Europe grew strongly during the same period, enhancing the joint trade. The "rise of the East", in terms of rising trade, is likely to have had an ambiguous effect on the German labor market. This paper investigates the employment effects of the "Hartz IV-Reform". Further, it concentrates on the labor market effects of the German and Eastern European productivity shock. The focus lies on the national and county level (including 402 counties). As the effects on regional labor markets differ and take time, the paper builds on the dynamic and spatial trade model of Caliendo et al. (2019). I find that the "Hartz IV-Reform" and the German productivity contributes positively to the decline of unemployment, whereas the increase in Eastern European productivity is only responsible for a minor increase in unemployment.
Subjects: 
Dynamic Trade Model
Labor Market Reform
Trade Liberalization
Productivity Shocks
Germany
Eastern Europe
JEL: 
F14
F16
F17
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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