A macroeconomic model of West German unemployment. Theory and evidence (Q1587504)

The book is the author's doctoral thesis (1999) devoted to the problem of involuntary unemployment in Germany. The investigations are based on a structural econometric model developed by the author. The model is intended to present long-run behavior of wages and employment rate. The influence of shocks that lead to cycles is also investigated. The model consists of two log-linear equations. The new factor is capital income taxation. The model is based on Cobb-Douglass technology and union utility. The evidence of the suggested model is justified via analysis of West Germany market experience in the last thirty years. The book consists of nine Chapters. Chapters 1-5 form a theoretic and applied basis for the suggested model. Chapter 1 is an introduction. In Chapter 2 the main concepts of cointegration and seasonality analysis are presented. Chapter 3 is devoted to an analysis of the union-firm bargain. In Chapter 4 the comparative analysis of the proportional and the generalized Nash bargaining solutions is provided. In Chapter 5 the dynamics of the interaction between actual and contract wages is analyzed. In Chapter 6 the suggested model of unvoluntary unemploment is presented and its basic properties are investigated. Chapter 7 is devoted to an empirical analysis of the suggested model. In Chapter 8 the concept of hysteresis is presented and its implications for econometric modelling are analyzed. Chapter 9 consists of the conclusions. Some recommendations and proposals for a political reform intended to reduce the level of unemployment in Germany are formulated.