According to a widespread view, Germany's unemployment crisis is caused by rigid labour markets, low profitability and increasing international competition. We argue that this view does not provide a convincing explanation for the dramatic rise in Germany's unemployment rate since 1989, first because no distinction is drawn between the situation in the Eastern part of Germany and that in the Western ...
The unemployment rate might not serve as an accurate measure of labor market slack when analysing countries with large scale labor market programs. We replicate and extend the wage curve for East Germany. The results are in favor of the incorporation of such policy measures.
