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Unemployment in Germany and the Eurosclerosis debate

  • Many European countries have experienced a significant increase of unemployment in recent years. This paper reviews several theoretical models that try to explain this phenomenon. Predominantly, these models claim a link between the poor performance of European labor markets and the high level of market regulation. Commonly referred to as the Eurosclerosis debate, prominent approaches consider insider-outsider relationships, search-models, and the influence of hiring and firing costs on equilibrium employment. The paper presents empirical evidence of each model and studies the relevance of the identified rigidities as a determinant of high unemployment in Europe. Furthermore, a case study analyzes the unemployment problem in Germany and critically discusses new reform efforts. In particular this section analyzes whether the recently enacted Hartz reforms can induce higher employment.

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Author:Denis Drechsler
Subtitle (English):Can the Hartz reforms induce higher employment?
Series (Serial Number):Finanzwissenschaftliche Diskussionsbeiträge (48)
Document Type:Working Paper
Year of Completion:2005
Publishing Institution:Universität Potsdam
Release Date:2006/09/20
Source:Finanzwissenschaftliche Diskussionsbeiträge / Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät, Lehrstuhl für Finanzwissenschaft ; 48
RVK - Regensburg Classification:QL 200
RVK - Regensburg Classification:QL 000
Organizational units:Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften
Extern / Extern
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft