Employment effects of Hartz reforms

We investigate the reasons for Germany's job miracle in the Great Recession 2008Recession /2009 with special reference to productivity and employment development. Germany has an extensive system of industrial relations and a strong social partnership. This characteristic makes it possible for German establishments to take advantage of several institutional settings, i.e. short-time work, working time accounts and company-level pacts for employment and competitiveness, in order to overcome the repercussions of economic crises. During the Great Recession specifically, the social partners' willingness to cooperate made a distinct difference for German establishments, thereby saving jobs and retaining establishment competitiveness in the longer run. We show that pacts for employment and competitiveness may not have a great impact in normal times, but significantly affected employment during the 2008/2009 crisis, thus contributing to Germany's successful handling of the crisis.

show abstract

Reevaluating the German labor market miracle

Burda

Seele²

2020

German Economic Review

View full text Add to dashboard Cite

AbstractFrom 2003 to 2018, employment in Germany increased by 7.3 million, or by 19.3 % – growth not observed since unification. This “labor market miracle” was marked by a persistent and significant expansion of both part-time and low-wage jobs and a deterioration in pay for these jobs, while total hours hardly increased; overall wage growth returned only after 2011. These developments followed in the wake of the landmark Hartz reforms (2003–2005). A modified framework of Katz and Murphy (1992) predicts negative correlation of wages with both relative employment and participation across cells in the period following these reforms. In contrast, wage moderation alone should generate positive association of wages and participation. Our findings are most consistent with a persistent, positive labor supply shock at given working-age population in a cleared labor market. An alternative perspective of labor markets, the search and matching model, also points to the Hartz IV reforms as the central driver of the German labor market miracle.

show abstract

Employment effects of Hartz reforms

Abstract: ArticleFolgen der Hartz-Reformen für die Beschäftigung

Cited by 3 publications

References 1 publication

Sozialleistungen und mögliche Einflüsse auf den Arbeitsmarkt

Sozialleistungen und mögliche Einflüsse auf den Arbeitsmarkt

The German Labour Market Puzzle in the Great Recession

Reevaluating the German labor market miracle

Contact Info

Product

Resources

About