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Escaping the unemployment trap: The case of East Germany

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dc.creator Merkl, Christian
dc.creator Snower, Dennis J.
dc.date 2007
dc.date.accessioned 2013-10-16T06:15:20Z
dc.date.available 2013-10-16T06:15:20Z
dc.date.issued 2013-10-16
dc.identifier http://hdl.handle.net/10419/3960
dc.identifier ppn:524299374
dc.identifier.uri http://koha.mediu.edu.my:8181/xmlui/handle/10419/3960
dc.description This paper addresses the question of why prolonged regional unemployment differentials tend to persist even after their proximate causes have been reversed (e.g., after wages in the highunemployment regions have fallen relative to those in the low-unemployment regions). We suggest that the longer people are unemployed, the greater is the likelihood of falling into a low-productivity "trap", through the attrition of skills and work habits. We develop and calibrate a model along these lines for East Germany and examine the effectiveness of three employment policies in this context: (i) a weakening of workers' position in wage negotiations due to a drop in the replacement rate or firing costs, leading to a fall in wages, (ii) hiring subsidies, and (iii) training subsidies. We show that the employment effects of these policies depend crucially on whether low-productivity traps are present.
dc.language eng
dc.publisher Kiel Institute for the World Economy (IfW) Kiel
dc.relation Kiel Working Papers 1309
dc.rights http://www.econstor.eu/dspace/Nutzungsbedingungen
dc.subject J64
dc.subject J31
dc.subject E24
dc.subject J30
dc.subject ddc:330
dc.subject Labor markets
dc.subject Labor market traps
dc.subject Calibration
dc.subject East Germany
dc.subject Langzeitarbeitslosigkeit
dc.subject Arbeitsproduktivität
dc.subject Qualifikation
dc.subject Arbeitsmarktpolitik
dc.subject Kündigungsschutz
dc.subject Reform
dc.subject Lohnsubvention
dc.subject Berufsbildungspolitik
dc.subject Wirtschaftspolitische Wirkungsanalyse
dc.subject Schätzung
dc.subject Neue Bundesländer
dc.title Escaping the unemployment trap: The case of East Germany
dc.type doc-type:workingPaper


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