Abstract

Reports from the European Labour Force Survey show a strikingly high persistence  of long-term unemployment in Germany. Around 45 per cent of the unemployed are longer than one year, about 20 per cent even longer than 4 years. The proportion of long-term unemployed is higher than in most European countries, Lower shares are held in particular in the Scandinavian countries, where less than 25 per cent of the unemployed are long-term unemployed.  How are these differences to be explained?

We approach this question by comparing the share of people who are "chronically without regular work". Conventional statistics do not capture this character of the unemployment problem because they do not reflect the long-term absence of  genuinely market-based, regular employment. In this joint project with the research area A1 and the Work Center of  the University of Tampere, we are investigating the level and incidence of "chronic unemployment" in Germany compared to Finland. In many countries, the duration of unemployment spells may be temporarily interrupted by activation phases, illness or discouragement as well as very short employment periods.  We strive for a  thorough analysis of the level and incidence of "chronic  unemployment"  on the basis of comparable administrative longitudinal data. In particular, we focus on the  impact of active labour market policy  on the level and composition of  structural unemployment.  Based on the longitudinal micro-data, we test the hypothesis that in countries with a comprehensive volume and high numbers of participants in publicly funded employment, active labour market policy serves primarily  to adjust to high structural unemployment and is  less a way to reduce it.