Labour Market Institutions and Worker Flows: Comparing Germany and the US

TitleLabour Market Institutions and Worker Flows: Comparing Germany and the US
Publication TypeJournal Article
Year of Publication2014
AuthorsJung, Philip, and Kuhn, Moritz
JournalThe Economic Journal
Volume124
Issue581
Pagination1317 - 1342
Date Published2014///
KeywordsGermany, labor market flows, unemployment, unemployment rate volatility, worker flows
Abstract

We compare labor market flows in the US and Germany between 1980 and 2004. In Germany, average worker flows in and out of unemployment are substantially lower; outflows are equally volatile in both countries; inflows are about twice as volatile in Germany and contribute more to the unemployment rate volatility. We explore four candidates for these differences: unemployment benefits; union bargaining power; employment protection and the efficiency of matching unemployed workers to open positions. We find that a lower matching efficiency in Germany can explain the bulk of the cross‐country differences. It amplifies the business cycle and adds persistence.

URLhttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=2536176