Kiel Working Papers, Kiel Institute for World Economics
No 1295:
Macroeconomic Aspects of Structural Labor Market Reforms in Germany
Jonas Dovern and Carsten-Patrick Meier
Abstract: Using a newly constructed macroeconometric model for
Germany and the rest of the Euro area, we investigate the macroeconomic
effects of structural labor market reforms in Germany. We find that neither
the fact that Germany can no longer pursue an independent monetary policy
nor the possibility that other countries in the Euro area might react to
reforms in Germany by implementing labor market reforms themselves
constitute impediments to successful reforms. Reforms would relative
quickly bring down unemployment and increase GDP significantly. Even former
labor market “insiders” would gain as net wages increase due to falling
unemployment insurance contributions.
Keywords: labor market reforms, macroeconometric model, Germany, Euro area; (follow links to similar papers)
JEL-Codes: E24,; J64; (follow links to similar papers)
26 pages, September 2006
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