Business Cycles in EU Member States

The paper investigates the business cycle relationships between the EU-15, the EU-11, as well as the EU-core countries for the period 1971 to 1997. Emphasis is put on the question whether there is a synchronization in the national business cycles or not. Using One-way- and Twoway-Anova techniques the results show that country-specific shocks are important to the smaller countries such as Luxembourg, Ireland, Portugal, and Finland. But for most of the EMU-members common shocks are much more important than country-specific shocks. In addition there is no indication of significant differences in the national growth rates, i.e. the European countries do not move along diverging growth paths. Nevertheless, departures over the business cycles are possible because persistence in output growth differs across countries. -- In dem Beitrag wird der konjunkturelle Zusammenhang zwischen den EU-15, den EU-11 und den ?Kern?-EU-Staaten für den Zeitraum von 1971 bis 1997 dahingehend untersucht, ob zwischen den Staaten ein konjunktureller Gleichlauf besteht oder nicht. Eine One-Way- und eine Two-Way-Anova-Analyse zeigt, daß insbesondere für die kleineren Länder länderspezifische Schocks eine beträchtliche Bedeutung haben. Demgegenüber dominieren bei den Kernländern deutlich die ?common shocks?. Da keine länderspezifischen Unterschiede feststellbar waren, kann daraus der Schluß gezogen werden, daß sich die europäischen Staaten entlang eines einheitlichen Wachstumspfades entwickeln. Gleichwohl können kurz- bis mittelfristige Abweichungen eintreten, da die Persistenz im Output für die einzelnen Länder unterschiedlich ist.

The unemployment-growth relationship in transition countries

Does the disappointingly high unemployment in Central and East European countries reflect non-completed adjustment to institutional shocks from transition to a market economy, or is it the result of high labour market rigidities, or rather a syndrome of too weak aggregate demand and output? In the case of transitional causes, unemployment is expected to decline over time. Otherwise, it would pose a challenge to the European Union, particular in case of accession countries, for it jeopardizes the ambitious integration plans of, and may trigger excessive migration to the Union. In order to find out which hypothesis holds 15 years after transition has started, we analyze the unemploymentgrowth dynamics in the eight new member countries from Central-Eastern Europe. The study is based on country and panel regressions with instrument variables (TSLS). The results suggest to declare the transition of labour markets as completed; unemployment responds to output and not to a changing institutional environment for job creation. The regression coefficients report a high trend rate of productivity and a high unemployment intensity of output growth since 1998. The conclusion is that labour market rigidities do not to play an important role in explaining high unemployment rates. Rather, GDP growth is dominated by productivity progress, while the employment relevant component of aggregate demand is too low to reduce substantially the high level of unemployment.unemployment, Okun’s law, transition

Is the European Monetary Union an Endogenous Currency Area? The Example of the Labor Markets

Our study tries to find out whether wage dynamics between Euro member countries became more synchronized through the adoption of the common currency. We calculate bivarate correlation coefficients of wage and wage cost dynamics and run a model of endogenously induced changes of coefficients, which are explained by other variables being also endogenous: trade intensity, sectoral specialization, financial integration. We used a panel data structure to allow for cross-section weights for country-pair observations. We use instrumental variable regressions in order to disentangle exogenous from endogenous influences. We applied these techniques to real and nominal wage dynamics and to dynamics of unit labor costs. We found evidence for persistent asymmetries in nominal wage formation despite a single currency and monetary policy, responsible for diverging unit labor costs and for emerging trade imbalances among the EMU member countries.

Arbeitslosengeld II – Anmerkungen zur Zusammenlegung von Arbeitslosenhilfe und Sozialhilfe

The paper discusses the consequences of the planned reform of the unemployment security system, namely the new unemployment benefits II which consists of the former “Arbeitslosenhilfe“ and of transfers from the social welfare system. The paper calculates the expected reductions in public spending and relates a part of this amout to a possible reduction in labour unit costs and its consequences for employment.

Kapital für Arbeit: Der JobFloater kommt ab November 2002

A critical review of some of the recommendations made by the Hartz commission, in particular the JobFloater module The author argues that this concept will not contribute to a visible improvement of the labor market situation unless further reforms are launched.

Hartz IV: 1-Euro-Jobs setzen falsche Anreize

The paper analyzes the different incentives due to different possibilities of additional earnings to the receipt of unemployment benefits. Long term unemployed people may earn additional income due to a regular occupation in the first labor market or due to social work. In the latter case people receive a expense allowance which they are allowed to hold for the full amount. Contrary to this income earned in a regular job is partly reduced (by 85 % for the first 400 Euro, e.g.) which might make working in the social or common sector more attractive than working in the first labor market. Secondly, given the unemployment benefits and the additional amount of earnings it might be more attractive with respect to total income than the income earned in the low wage sector of the economy. This might imply a negative incentive for those who are working in a low wage sector.

Kapital für Arbeit: Der JobFloater kommt ab November 2002

A critical review of some of the recommendations made by the Hartz commission, in particular the JobFloater module The author argues that this concept will not contribute to a visible improvement of the labor market situation unless further reforms are launched.

Business Cycles in EU Member States

The paper investigates the business cycle relationships between the EU-15, the EU-11, as well as the EU-core countries for the period 1971 to 1997. Emphasis is put on the question whether there is a synchronization in the national business cycles or not. Using One-way- and Two-way-Anova techniques the results show that country-specific shocks are important to the smaller countries such as Luxembourg, Ireland, Portugal, and Finland. But for most of the EMU-members common shocks are much more important than country-specific shocks. In addition there is no indication of significant differences in the national growth rates, i.e. the European countries do not move along diverging growth paths. Nevertheless, departures over the business cycles are possible because persistence in output growth differs across countries

Reform des Arbeitsmarktes – Hartz-Vorschläge reichen nicht

Zwei Millionen Arbeitslose weniger in drei Jahren – wer wünscht sich das nicht? Und das Ziel scheint so nahe zu liegen, setzt man nur die Vorschläge der Hartz-Kommission rasch in die Praxis um. Grundsätzlich sind Vorschläge, die zu einer besseren Vermittlung von Arbeitslosen in den ersten Arbeitsmarkt führen, zu begrüßen. Mit ihren Vorschlägen zur Reform der Arbeitsvermittlung hat die Kommission einen ersten, wichtigen Schritt hin zu einer Neuordnung des Arbeitsmarktes unternommen....

Regional convergence and economic performance: a case study of the West German Laender

In the paper we analyze the convergence process of the West German Laender from 1970 to 1995 using descriptive tools as well as panel estimation methods. Although there have been some winners in this process, the main finding is that convergence was insufficient in the sense that no gains have been achieved with respect to a stronger harmonization of the economic performances in the Laender. Some of them proofed to be unable to respond adequately to structural changes, whereas others successfully overcame those challenges. Panel estimates of production functions of the Laender reveal no significant differences in the production technology across Laender. -- Die Arbeit untersucht, ob im Zeitraum von 1970 bis 1996 eine Konvergenz im wirtschaftlichen Wachstum der westlichen Bundesländer stattgefunden hat. Die Ergebnisse zeigen, daß insbesondere die südlichen Bundesländer ihre relative Position verbessern konnten. Jene Bundesländer, die schon 1970 als ?strukturschwach? galten, schafften es nicht, den Abstand zu verringern. Der Strukturwandel wurde von den einzelnen Bundesländern mit unterschiedlichem Erfolg bewältigt. Eine Länder vermochten daraus Vorteile für ihre Entwicklung zu ziehen, während andere nur unzureichend auf diese Herausforderung reagierten. Insgesamt kann im Untersuchungszeitraum weder von einer Konvergenz noch von einer Divergenz der wirtschaftlichen Entwicklung in den Ländern gesprochen werden. Dem widerspricht nicht, daß einige Ländern (Hessen und Bayern) insgesamt erfolgreicher in ihrer Entwicklung waren als die übrigen Bundesländer.