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http://ssrn.com/abstract=1803111
 
 

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Distributional Consequences of Labor-Demand Shocks: The 2008-09 Recession in Germany


Olivier Bargain


Institute for the Study of Labor (IZA); University College Dublin (UCD)

Herwig Immervoll


World Bank, Europe and Central Asia; Organization for Economic Co-Operation and Development (OECD) - Social Policy Division; Institute for the Study of Labor (IZA); ISER Institute for Social and Economic Research; University of Canberra - National Centre for Social and Economic Modelling (NATSEM); United Nations - European Centre for Social Welfare Policy and Research

Andreas Peichl


Centre for European Economic Research (ZEW); University of Mannheim - School of Economics (VWL); Institute for the Study of Labor (IZA); University of Essex - Institute for Social and Economic Research (ISER)

Sebastian Siegloch


Institute for the Study of Labor (IZA); University of Mannheim - Department of Economics; Centre for European Economic Research (ZEW) - Corporate Taxation and Public Finance Research; CESifo (Center for Economic Studies and Ifo Institute)

March 31, 2011

CESifo Working Paper Series No. 3403

Abstract:     
The distributional consequences of the recent economic crisis are still broadly unknown. While it is possible to speculate which groups are likely to be hardest-hit, detailed distributional studies are still largely backward-looking due to a lack of real-time microdata. This paper studies the distributional and fiscal implications of output changes in Germany 2008-09, using data available prior to the economic downturn. We first estimate labor demand on 12 years of detailed, administrative matched employer-employee data. The distributional analysis is then conducted by transposing predicted employment effects of actual output shocks to household-level microdata. A scenario in which labor demand adjustments occur at the intensive margin (hour changes), close to the German experience, shows less severe effects on income distribution compared to a situation where adjustments take place through massive layoffs. Adjustments at the intensive margin are also preferable from a fiscal point of view. In this context we discuss the cushioning effect of the tax-benefit system and the conditions under which German-style work-sharing policies can be successful in other countries.

Number of Pages in PDF File: 27

Keywords: labor demand, output shock, tax-benefit system, crisis, income distribution

JEL Classification: D58, J23, H24, H60

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Date posted: April 8, 2011  

Suggested Citation

Bargain, Olivier and Immervoll, Herwig and Peichl, Andreas and Siegloch, Sebastian, Distributional Consequences of Labor-Demand Shocks: The 2008-09 Recession in Germany (March 31, 2011). CESifo Working Paper Series No. 3403. Available at SSRN: http://ssrn.com/abstract=1803111

Contact Information

Olivier Bargain
Institute for the Study of Labor (IZA) ( email )
P.O. Box 7240
Bonn, D-53072
Germany
University College Dublin (UCD) ( email )
Belfield, Dublin 4 4
Ireland
+353 1 716 8357 (Phone)
+353 1 283 0068 (Fax)
HOME PAGE: http://www.ucd.ie/economics/staff/obargain/obargain.htm
Herwig Immervoll
World Bank, Europe and Central Asia ( email )
1818 H Street, N.W.
Washington, DC 20433
United States
Organization for Economic Co-Operation and Development (OECD) - Social Policy Division ( email )
2 rue Andre Pascal
Paris Cedex 16, 75775
France
(33 1) 45 24 92 14 (Phone)
(33 1) 44 30 61 78 (Fax)
HOME PAGE: http://www.oecd.org/els/social
Institute for the Study of Labor (IZA) ( email )
P.O. Box 7240
Bonn, D-53072
Germany
HOME PAGE: http://www.iza.org/profile?key=1935

ISER Institute for Social and Economic Research ( email )
Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
HOME PAGE: http://www.iser.essex.ac.uk/people/research-associates
University of Canberra - National Centre for Social and Economic Modelling (NATSEM) ( email )
Canberra, ACT 2601
AUSTRALIA
HOME PAGE: http://www.canberra.edu.au/centres/natsem/people/associates/herwig-immervoll
United Nations - European Centre for Social Welfare Policy and Research ( email )
Berggasse 17
Vienna, A1010
Austria
HOME PAGE: http://www.euro.centre.org
Andreas Peichl (Contact Author)
Centre for European Economic Research (ZEW) ( email )
P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany
University of Mannheim - School of Economics (VWL) ( email )
Mannheim 68131
Germany
Institute for the Study of Labor (IZA) ( email )
P.O. Box 7240
Bonn, D-53072
Germany
University of Essex - Institute for Social and Economic Research (ISER)
Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
Sebastian Siegloch
Institute for the Study of Labor (IZA) ( email )
P.O. Box 7240
Bonn, D-53072
Germany
University of Mannheim - Department of Economics ( email )
D-68131 Mannheim
Germany
Centre for European Economic Research (ZEW) - Corporate Taxation and Public Finance Research ( email )
United States
CESifo (Center for Economic Studies and Ifo Institute) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany
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