Size and structure of the hidden labour force in the new federal Länder

Abstract

"Following the economic collapse in eastern Germany, in addition to the high level of unemployment, a hidden labour force of a considerable size has also developed in the new Länder. The IAB estimates the hidden labour force in the new Länder for 1997 to be more than 800,000 people. This estimation, however, is based in part on plausible assumptions for the development of labour force participation. This is because for methodical reasons the concept of the IAB labour force potential can not yet be transferred from western to eastern Germany. The aim of this paper is to develop an alternative procedure for estimating the hidden labour force. In the new Länder a considerable part of the hidden labour force is at present taking part in further training and retraining, early retirement schemes and other labour market measures run by the Federal Employment Services (Bundesanstalt für Arbeit). The necessary data for this group is available. Thus all that is required is information concerning the remainder of the hidden labour force (the so-called hidden labour force in the stricter sense which includes, e.g., the discouraged workers and other persons not in the labour force). The model presented for the first time here uses the panel data of the labour market monitor and the socio-economic panel to attempt to estimate this group of people on the basis of their employment histories. The results for the years 1992 to 1995 show the hidden labour force in the stricter sense to include some 150,000 to 250,000 people. There is only a slight upward development trend. Thus the level and the trend deviate somewhat from the previous estimates made by the IAB. As is demonstrated, these results can also be disaggregated according to age and gender. With this estimation of the size and structure of the hidden labour force, an important basis is created for updating the forecast of the future potential labour supply in the new Länder." (Author's abstract, IAB-Doku) ((en))

Cite article

Fuchs, J. (1998): Umfang und Struktur der Stillen Reserve in den neuen Bundesländern. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 31, No. 1, p. 58-78.