01925cas a2200253 a 4500 AALejournalIMF013374 230101c9999 xx r poo 0 0eng d 5.00 USD 9781589062702 1018-5941 BD-DhAAL BD-DhAAL Krebs, Tom. Macroeconomic Evaluation of Labor Market Reform in Germany / Tom Krebs, Martin Scheffel. Washington, D.C. : International Monetary Fund, 2013. 1 online resource (42 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In 2005 the German government implemented the so-called Hartz IV reform, which amounted to a complete overhaul of the German unemployment insurance system and resulted in a significant reduction in unemployment benefits for the long-term unemployed. In this paper, we use an incomplete-market model with search unemployment to evaluate the macro-economic and welfare effects of the Hartz IV reform. We calibrate the model economy to German data before the reform and then use the calibrated model economy to simulate the effects of Hartz IV. In our baseline calibration, we find that the reform has reduced the long-run (noncyclical) unemployment rate in Germany by 1.4 percentage points. We also find that the welfare of employed households increases, but the welfare of unemployed households decreases even with moderate degree of risk aversion. Mode of access: Internet Scheffel, Martin. IMF Working Papers; Working Paper ; No. 2013/042 Full text available on IMF http://elibrary.imf.org/view/journals/001/2013/042/001.2013.issue-042-en.xml IMF e-Library