Unemployment Benefits and Unemployment Rates of Low-Skilled and Elder Workers in West Germany: A Search Equilibrium Approach

42 Pages Posted: 16 Jun 2004

See all articles by Andrey Launov

Andrey Launov

University of Wuerzburg; IZA Institute of Labor Economics

Joachim Wolff

University of Munich

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: May 2004

Abstract

In this paper we investigate whether the extension of the entitlement to unemployment benefits in the mid 80s can explain the increase in the unemployment rates of unskilled and elder workers in western Germany. To answer this question we estimate a version of the Burdett-Mortensen search equilibrium model and analyze how workers' search behaviour responded to these reforms. We try both nonparametric and fully-parametric estimation methods and identify the cases in which the nonparametric approach cannot be applied. We find that the entitlement reforms are largely responsible for the increase of unemployment among unskilled workers.

Keywords: search equilibrium, unemployment benefit, parametric estimation, Germany

JEL Classification: J64, J65

Suggested Citation

Launov, Andrey and Wolff, Joachim and Klasen, Stephan, Unemployment Benefits and Unemployment Rates of Low-Skilled and Elder Workers in West Germany: A Search Equilibrium Approach (May 2004). IZA Discussion Paper No. 1161. Available at SSRN: https://ssrn.com/abstract=555201

Andrey Launov (Contact Author)

University of Wuerzburg ( email )

Sanderring 2
W├╝rzburg, D-97070
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Joachim Wolff

University of Munich ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany
+49-551-397303 (Phone)
+49-551-397302 (Fax)

HOME PAGE: www.vwl.wiso.uni-goettingen.de/klasen.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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