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Safeguarding Jobs through Labor Hoarding in Germany

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Author Info

  • Martin Dietz
  • Michael Stops
  • Ulrich Walwei

Abstract

As a consequence of the global financial crisis Germany has experienced the deepest slowdown of its economy since World War II. However, at least up to now the German labor market has not shown a strong reaction to the financial crisis. Given the sharp decrease in GDP the levels of employment and unemployment are still quite stable. One possible reason for the recent development is an increased level of labor hoarding, indicating that firms do not immediately adjust labor input in line with demand for their products. The paper uses both aggregate and firm-level data in order to examine the extent to which labor hoarding has contributed towards stabilizing the labor market during periods of recession. In addition, we examine the extent to which subsidized types of labor hoarding, such as short-time work, may have facilitated the retention of workers by employers. The paper shows that labor hoarding has been of certain relevance for the German labor market in times of economic slack. This is obviously true during the current crisis. Nevertheless, short-time work has also been used by firms which were not suffering significantly from an underutilization of their capacities. To avoid windfall gains the state should consider more effective targeting systems or advocate functional equivalents such as more flexibility in working time. Comment by Olaf Hübler.

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Bibliographic Info

Article provided by Duncker & Humblot, Berlin in its journal Applied Economics Quarterly.

Volume (Year): 61 (2010)
Issue (Month): Supplement ()
Pages: 125-166

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Handle: RePEc:aeq:aeqaeq:v61_y2010_is_q5_p125-166

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Related research

Keywords: Labor hoarding; economic crisis; employment; public policy;

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Cited by:
  1. Eichhorst, Werner & Giulietti, Corrado & Guzi, Martin & Kendzia, Michael J. & al., et, 2011. "Report No. 40: The Integration of Migrants and its Effects on the Labour Market," IZA Research Reports 40, Institute for the Study of Labor (IZA).
  2. Sandrine Cazes & Sher Verick & Fares Al Hussami, 2013. "Why did unemployment respond so differently to the global financial crisis across countries? Insights from Okun’s Law," IZA Journal of Labor Policy, Springer, vol. 2(1), pages 1-18, December.
  3. Olga Bohachova & Bernhard Boockmann & Claudia M. Buch, 2011. "Labor Demand During the Crisis: What Happened in Germany?," CESifo Working Paper Series 3625, CESifo Group Munich.
  4. Dietz, Martin & Stops, Michael & Walwei, Ulrich, 2012. "Securing Jobs in Times of Recession. The German Experience during the Financial Crisis 2008/2009/Asegurando los puestos de trabajo en tiempos de recesión. La experiencia alemana durante la crisis fin," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 30, pages 59-100, Abril.
  5. Alexander Herzog-Stein & Fabian Lindner & Simon Sturn & Till van Treeck, 2010. "Vom Krisenherd zum Wunderwerk?," IMK Report 56-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  6. Cazes, Sandrine & Verick, Sher & Al Hussami, Fares, 2011. "Diverging trends in unemployment in the United States and Europe : evidence from Okun's law and the global financial crisis," ILO Working Papers 467629, International Labour Organization.
  7. Sandra M. Leitner & Robert Stehrer, 2012. "Labour Hoarding during the Crisis: Evidence for selected New Member States from the Financial Crisis Survey," wiiw Working Papers 84, The Vienna Institute for International Economic Studies, wiiw.

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