Regional decomposition in age-group unemployment dynamics in Germany

Abstract

Abstract This article analyzes age-group-related differences in the risk of losing a job and the chance to find new employment using regional administrative data for Germany. I also consider flows between inactivity (out of the labor force) and unemployment to examine the relative contributions of labor market flows to different age-group unemployment dynamics. Inactivity and activity flows account for about 23% (and 83% for the youth) of unemployment dynamics, and contributions of separation (11%-50%) and job finding (5%-30%) vary with age-groups. Counties with a larger share of the labor force youth have high dynamics and very low unemployment rates. In contrast, regions with a smaller percentage of youth experience twice as large unemployment rates. Overall, the results provide strong evidence for decreasing regional labor market dynamics when the share of older workers increases.