15 years of pension reform in Germany: old successes and new threats

The paper surveys the state of German pension system after a sequence of reforms aimed at achieving long-term sustainability. We argue that the latest reforms have moved pension provision in Germany in principle from a defined benefit to a defined contribution scheme, and that this move has stabilized pension finances to a large extent. We furthermore argue that the real economy consequences of global financial create threats to the core success factors of the reforms - cutting pension levels and raising mandatory pension age. Finally the paper discusses further possible reform measures, including the option to install a fourth pillar providing income in retirement through working after pension age. --Pension Financing,Financial Crisis,Fiscal Sustainability Survey,Germany

Participation Behavior of East German Women after German Unification

The paper studies the determinants of labor force participation by East German women after unification. To isolate the role of preferences on labor force participation from individual characteristics, we develop a panel data model that simultaneously explains participation, employment, and wages. The model, estimated for East and West Germany on the basis of the German Socio-Economic Panel, indicates that distinct preferences could explain the regional difference in participation rates at unification. Afterward East German women became less willing to participate, but the negative participation trend was offset on the aggregate level by changes in characteristics and wages promoting participation.http://deepblue.lib.umich.edu/bitstream/2027.42/39862/3/wp477.pd

Participation Behavior of East German Women after German Unification

The paper studies the determinants of labor force participation by East German women after unification. To isolate the role of preferences on labor force participation from individual characteristics, we develop a panel data model that simultaneously explains participation, employment, and wages. The model, estimated for East and West Germany on the basis of the German Socio-Economic Panel, indicates that distinct preferences could explain the regional difference in participation rates at unification. Afterward East German women became less willing to participate, but the negative participation trend was offset on the aggregate level by changes in characteristics and wages promoting participation.Transitional Economies, Labor Force Participation, Panel Data

Report No. 8: Evaluation of the Active Labor Market Program "Beautiful Serbia"

Final report on behalf of the United Nations Development Program (UNDP) Serbia and Montenegro, Bonn 2006 (84 pages)

Sectoral differences in wage freezes and wage cuts: evidence from a new firm survey

The paper provides evidence concerning incidence and sources of nominal wage rigidity in services and manufacturing, using a new and large employer survey on wage and price setting behaviour for Germany. We observe that wage freezes are more frequent in services than in manufacturing, whereas wage cuts are less frequent. The significant sector gaps do not vanish after controlling for relevant firm characteristics influencing the incidence of wage freezes and wage cuts, notably coverage by collective agreements and the degree of price competition on the product market. An analysis of firms' view on the reasons preventing wage cuts suggests that specific fear of excess worker turnover could explain distinct wage setting behaviour in services. --Nominal Wage Rigidity,Efficiency Wages,Manufacturing and Services,Germany

Participation Behavior of East German Women after German Unification

The paper studies the determinants of labor force participation by East German women after unification. To isolate the role of preferences on labor force participation from individual characteristics, we develop a panel data model that simultaneously explains participation, employment, and wages. The model, estimated for East and West Germany on the basis of the German Socio-Economic Panel, indicates that distinct preferences could explain the regional difference in participation rates at unification. Afterward East German women became less willing to participate, but the negative participation trend was offset on the aggregate level by changes in characteristics and wages promoting participation.Transitional Economies, Labor Force Participation, Panel Data

Downward Nominal Wage Rigidity in Services: Direct Evidence from a Firm Survey

The paper uses a new German employer survey on wage setting practices to analyze incidence and sources of nominal wage rigidity in services vs. manufacturing. We observe that wage freezes are significantly more frequent and wage cuts less frequent in services. Reasons preventing wage cuts reported by employers suggest that fear of excess worker turnover could explain this distinct behavior.nominal wage rigidity, efficiency wages, manufacturing and services, Germany

Wage and employment effects of immigration to Germany: evidence from a skill group approach

The paper analyzes the labor market impact of migration by exploiting variation in the labor supply of foreigners across groups of workers with the same level of education but different work experience. Estimates on the basis of German register data for the period 1975-97 do not confirm the hypothesis that penetration of migrants into skill cells has a significant negative effect on the earnings and employment opportunities of native men. The results indicate that a 10 percent rise of the share of immigrants in the workforce would in general reduce wages by less than one percent and not increase unemployment. Though the adverse effects appear stronger for less-qualified and older workers, the evidence altogether sharply contrasts that from a parallel study for the United States indicating a consistent and substantial negative impact of an immigrant labor supply shock on native competitors

Eine fiskalische Gesamtbilanz der Zuwanderung nach Deutschland

Dieser Beitrag analysiert die fiskalischen Gesamtwirkungen der Zuwanderung nach Deutschland mit Hilfe der demographisch basierten langfristigen Budgetmethode der Generationenbilanzierung. Für den Bestand der Einheimischen und Zuwanderer wird der Gegenwartswert der individuell über den verbleibenden Lebenszyklus geleisteten Steuern und empfangenen Transfers abgeschätzt. Auf dieser Grundlage wird unter Berücksichtigung der marginalen Bereitstellungskosten öffentlicher Güter gezeigt, dass Einwanderung die öffentlichen Haushalte intertemporal direkt entlastet, wenn künftige Zuwanderer die fiskalische Leistungsfähigkeit der heutigen Bevölkerung zügig erreichen. Darüber hinaus entstehen indirekte fiskalische Vorteile, weil die deutsche Finanzpolitik nicht nachhaltig ist. Eine Verbreiterung der Besteuerungsbasis durch Migration reduziert die zum Erhalt der staatlichen Zahlungsfähigkeit erforderliche Erhöhung der individuellen Finanzierungsbeiträge spürbar.The paper uses the long-term budget method of generational accounting to evaluate the overall fiscal impact of immigration to Germany. On the basis of a complete balance of life cycle taxes paid and transfer received by native and migrant residents, and accounting for the marginal cost of providing public goods, it is shown that immigration has a positive impact on the intertemporal government budget, even if future migrants do not reach the fiscal capacity of the resident migrant population at once. Further gains for the incumbent population relate to the fact that current fiscal policy is not sustainable. Generational accounting indicates that the increase of individuals? net fiscal contributions, required to keep the government solvent in the long term, is reduced substantially, if future immigrants share the burden of adjustment

Fiskalische Effekte der Zuwanderung nach Deutschland: Eine Generationenbilanz

Der Beitrag untersucht die Bedeutung von Zuwanderung für die langfristige Entwicklung öffentlicher Haushalte in Deutschland. Mit Hilfe der Generationenbilanzierung werden die Nettosteuerzahlungen von Zuwanderern von ihrer Ankunft im Aufnahmeland bis an ihr Lebensende geschätzt. Wenn künftige Einwanderer der heute in Deutschland lebenden Ausländerbevölkerung ähneln, ist der Gesamtbeitrag der Zuwanderung zu den öffentlichen Haushalten eindeutig positiv. Immigration wäre daher ein geeignetes Instrument, in einer alternden Gesellschaft steigende Steuerlasten für die einheimische Bevölkerung zu verringern. Eine aktive Einwanderungspolitik, die hoch Qualifizierte selektiert und die Integration der Zuwanderer in den Arbeitsmarkt unterstützt, vergrößert die positiven Wirkungen auf die Steuerlast der einheimischen Bevölkerung. Allerdings kann selbst hohe Zuwanderung gut ausgebildeter Erwerbspersonen die von einer alternden Bevölkerung ausgelösten generationalen Umverteilungsprozesse nur teilweise aufheben.The paper employs generational accounting to analyze the intertemporal fiscal impact of immigration to Germany. Generational accounts for native and alien residents are distinguished to assess what might be the lifetime net tax payments of prospective immigrants after arrival. Supposed future immigrants resemble the current migrant population in Germany, the fiscal externality on the incumbent population due to immigration is found positive and large. Further, immigration probably reduces generational redistribution through demographic aging even if migrants assimilate slowly fiscally. However, while selective immigration policy could raise the average migrant surplus to the intertemporal government budget, it cannot restore fiscal sustainability