Penalized Splines - Estimation with Longitudinal Unemployment Data Analyses of Unemployment Durations and Unemployment Risks in Germany

References 93 VI 1 Introduction Unemployment is still a central problem in European economies and an abiding theme in labour market policy. In the 1990s, in the European Union, rising unemployment led to an European employment policy and a new section on employment was introduced into the Amsterdam Treaty signed in October 1997. In the same year, the European Employment Strategy (EES) was initiated at the Luxembourg Jobs Summit with the reduction of unemployment as its major target. The process of an European employment policy is continued to this day and the section on employment is now regulated by the Lisbon Treaty which came into force in December 2009. In 2010, new impulses on the European Employment Strategy for the next 10 years were given in context of the strategy 'Europe 2020' where one of the aims is to raise employment in all member states of the European Union, see for example Bergmann (2012) and European Commission (2010). Taking a look at Germany, after over a decade of high unemployment rates, extensive labour market reforms-named the Hartz reforms-took place in the early years of this millenium. The three main points of these reforms elaborated by an independent expert commission in 2002 were to ameliorate employment policy measures and services, to mobilize unemployed individuals, and to use labour market deregulations to encourage demand in the labour market, see Jacobi and Kluve (2006). To follow the outcomes of such policies and to identify differences and changes in labour markets, there is the need of labour market statistics and labour market research. Frequently, unemployment and employment rates are used as a macroeconomic measure in order to compare and explain regional and national labour markets as well as to point out differences between gender, age, education, and duration, as performed, for example, in official statistics in OECD (2011), European Commission (2011a), European Commission (2011b), and Bundesagentur für Arbeit (2011). This kind of statistic is of course not the only way to analyse labour markets. Focusing on a country's situation of unemployment, beside the pure analysis and comparison of unemployment rates, the analysis of effects on the unemployment duration or the risk of getting unemployed is of outstanding interest in labour market research. Apart from those papers dealing with theoretical approaches to explain these aspects of unemployment (see by way of example 1 1 Introduction for the duration of unemployment Mortensen, 1970), other papers in …