Employment Agency did not contribute to the decline in unemployment in Germany. By contrast, improved activation of unemployed … restructuring of the Federal Employment Agency in Germany (Hartz III labor market reform) for aggregate matching and unemployment … workers reduced unemployed by 0.8 percentage points. Through the lens of an aggregate matching function, more activation is …

generosity of long-term unemployment benefits. We propose a model with different unemployment durations, where the reform … decline in the replacement rate for long-term unemployed. We find that Hartz IV was a major driver for the decline of Germany …’s steady state unemployment and that partial and equilibrium effect were nearly of equal importance. In addition, we provide …