Abstract

The number of unemployed workers decreased dramatically in Germany from 2005 onwards. While at its peak in the first quarter of 2005 at over 5.2 million, it fell by 1.6 million by 2008. At the same time, employment increased by 1.2 million and continued to rise. The implementation of the so called Hartz reforms from 2003 to 2005 could suggest that these coinciding trends might be due to these reforms. Using two huge representative micro data-sets, we account for the decrease of unemployment by decomposing the inflows and outflows between unemployment and various other labour market states. Following the unemployment cohort of February 2005 over time, we analyse how many of the former unemployed workers found a job, were out of the labour market or still or again unemployed in 2009.