Working Paper
Unemployment Benefit and Wages: The Impact of the Labor Market Reform in Germany on (Reservation) Wages
Stefan Arent, Wolfgang Nagl
ifo Institut für Wirtschaftsforschung, München, 2011
Ifo Working Paper No. 101
ifo Institut für Wirtschaftsforschung, München, 2011
Ifo Working Paper No. 101
In this paper, we contribute to the literature on the impact of the unemployment benefit on (reservation) wages. We use the German BA-Employment Panel (2008) to identify the effect of a reduced unemployment benefit due to the labor market reform of 2005 in Germany. Using this unique experiment, we find strong evidence that a lower unemployment benefit has an adverse effect on wages.
Schlagwörter: Unemployment benefit, reservation wages, wages.
JEL Klassifikation: J640,J650