Abstract

During the past few years, the German labour market developped extraordinarily well: It responded moderately to the economic crisis in 2008/09 and employment rose substantially during economic expansions before and therafter. Macroevaluations of the Hartz Reforms suggest that not only very good economic conditions during the upswing phases were responsible for the observed improvement but also structural changes, as for example in wage formation and unemployment insurance. However, an explicit link to either structural or cyclical effects is missing so far. Therefore, the project aims at disentangling selected labour market variables such as matching efficiency and the separation rate into their trend and cycle components. This will be done using an unobserved components approach. Afterwards, we may be able to distinguish whether the observed labour market changes are traced back to shocks on either trend or cycle. This focusses the choice among theoretically derived explanations. Furthermore, we may conclude whether the effects themselves are permanent or transitory.