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Germany, as most other European countries, has been plagued by a persistently high level of long-term unemployment … level of long-term unemployment in Germany relative to the United States? …
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We analyze the dramatic decline of the employment share of unskilled labor in the West German economy, in particular its relation to the relatively rigid earnings structure. We find that the substitution elasticity between unskilled and skilled labor is rather low in most sectors of the economy....
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