Abstract
Abstract Germany’s labor market responded only mildly to the Great Recession. Important factors for this development include the strong economic position due to recent labor market reforms, the crisis affecting mainly export-oriented companies, the extension of short-time work, time buffers due to working time accounts, the behavior of social partners, and automatic stabilizers. We emphasize the important interaction between short-time work and long-term shortages of skilled workers in sectors particularly affected by the crisis. Although Germany’s experience is in stark contrast to the United States, we identify and discuss common challenges at the center of the future jobs debate.
Highlights
It is a broad consensus that Germany’s post-war economic boom constitutes an “economic miracle” (Giersch et al, 1992; Lang, 1990)
The situation has remarkably changed since the 1990s when the impressive employment growth in the United States was frequently characterized as an “employment miracle” (Krueger and Pischke, 1997). We argue that this striking change is mainly due to successful labor market reforms in European countries such as in Germany and due to demographic changes
The long-term structural adjustments in the German labor market can definitely serve as a role model for other countries
Summary
It is a broad consensus that Germany’s post-war economic boom constitutes an “economic miracle” (Giersch et al, 1992; Lang, 1990). The situation has remarkably changed since the 1990s when the impressive employment growth in the United States was frequently characterized as an “employment miracle” (Krueger and Pischke, 1997) We argue that this striking change is mainly due to successful labor market reforms in European countries such as in Germany and due to demographic changes. The German economic miracle can be described as one of a stable labor market in 2009 and beyond, where employment stayed high and unemployment moved up only marginally with lower working hours per person – in spite of a substantial output decline. It is the economically important federal states such as Baden-Württemberg that reported the largest output declines (Figure 7). We discuss the perspectives (as well as a number of challenges) for Germany’s future economic development in more detail in our conclusions
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