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Thursday, October 6, 2011

Minijobs, Milton Friedman, and an Overlooked Success Story (Berlin Journal #3)


One of several reasons why Germany has the lowest unemployment rate in Europe is the “minijob.” Long-term recipients of unemployment benefits and social assistance (Haartz IV recipients) can keep extra earning from “minijobs” up to 160 Euros per month. They can earn up to 400 Euros but their benefits are reduced for earnings above 160 Euros. This works something like Milton Friedman’s negative income tax. Persons with minijobs are counted as employed.

Notably, the German Federal Labor Agency reports that 93 percent of minijob holders earn 160 Euros. Who says the long-term unemployed cannot count?

October 3 was the Day of German Reunification – a national holiday. The streets were empty except for huge crowds in downtown Berlin and Bonn. Nightly television ran documentaries and showed films about life in a divided Germany. Overlooked was a major success story. The most respected  public opinion survey research organization reported for the first time a near parity in life satisfaction between the East and German populations. At huge cost and effort, it seems German reunification has been completed. No one seems  to notice, which is a victory in itself.

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