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Title: (Spillover) Effects of Labour Market Reforms in Germany and France
Author(s): Claudia Busl and Atilim Seymen
Year: 2013
Month: June
Number: 8
Pages: 58
File URL: fileadmin/documents/pdf/Workingpapers/WWWforEurope_WPS_no008_MS75.pdf
Keywords: Labour market reforms, search and matching, dynamic stochastic general equilibrium models
JEL-Codes: E24, E61, E65, F42, J38, J63
Abstract: In this paper we analyze the (potential) effects of labour market and fiscal policy reforms by heterogeneous European countries—Germany and France—on the domestic and foreign economy. We test the implications of the gains in matching efficiency and reduced unemployment benefits induced by the German Hartz reforms in a two-country RBC model with frictions in the labour market, which replicates the data quite well. We then explore the reform possibilities in the French labour market and their potential (inter)national effects by calibrating the model to recent data. Both home and foreign economies benefit from labour market reforms in the home economy in our framework.

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