TY  - RPRT
        AU  - Woodcock, Simon D.
        TI  - The Effect of the Hartz Labor Market Reforms on Post-unemployment Wages, Sorting, and Matching
        PY  - 2020/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 13300
        UR  - https://www.iza.org/publications/dp13300
        AB  - We use linked longitudinal data on employers and employees to estimate how the 2003-2005 Hartz reforms affected the wages of displaced German workers after they returned to work. We also present a simple new method to decompose the wage effects into components attributable to selection on unobservables, and to changes in the way that displaced workers are sorted across firms and worker-firm matches upon re-employment. We find that the Hartz reforms substantially reduced the wages of displaced workers after their return to work. Women experienced smaller wage losses than men.
For both sexes, over 80 percent of the increased wage loss was because displaced workers found re-employment in lower-wage firms after the reforms. A disproportionate share of these low-wage firms offer temporary employment services to other firms, and we document a large increase in post-displacement employment in the temporary work sector after the reforms. Sorting into worse matches with employers explains a smaller 5-9 percent of the wage loss experienced by men, and 12.5-23 percent of the female wage loss. Collectively, the sorting and matching channels explain almost all of the Hartz reforms' effect on post-displacement wages.
        KW  - selection
KW  - matching
KW  - sorting
KW  - reallocation
KW  - unemployment insurance
KW  - displacement
KW  - Hartz reforms
KW  - linked employer-employee data
KW  - fixed effects
        ER  -