Labor Adjustment under Different Institutional Structures: A Case Study of Germany and the United States
In: Institutional Frameworks and Labor Market Performance: Comparative Views on the U.S. and German Economies
AbstractLike most Western European countries, Germany stringently regulates dismissals and layoffs. Critics contend that this regulation raises the costs of employment adjustment and hence impedes employers' ability to respond to fluctuations in demand. Other German labor policies, however, most especially the availability of unemployment insurance benefits for those on short time, facilitate the adjustment of average hours per worker in lieu of layoffs. Building on earlier work, we compare the adjustment of employment, hours and inventories to demand shocks in the German and U.S. manufacturing sectors. We find that, in the short run, whereas U.S. employers rely principally on the adjustment of employment levels to respond to demand shocks, German employers rely principally on the adjustment of average hours per worker. The adjustment of overall labor input is generally similar in the two countries. Short-time work makes a very important contribution to short-run hours adjustment in Germany. We find little evidence that inventories help to buffer demand fluctuations in either country. Our findings suggest that, given appropriate supporting institutions, strong worker job security can be compatible with employers' need for flexibility in staffing levels.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
This chapter was published in: Friedrich Buttler & Wolfgang Franz & Ronald Schettkat & David Soskice (ed.) Institutional Frameworks and Labor Market Performance: Comparative Views on the U.S. and German Economies, Routledge, pages 285-315, 1995.
This item is provided by W.E. Upjohn Institute for Employment Research in its series Book chapters authored by Upjohn Institute researchers with number snhkga19952.
Contact details of provider:
Postal: 300 S. Westnedge Ave. Kalamazoo, MI 49007 USA
Web page: http://www.upjohn.org
wage labor adjutment; labor supply; Germany;
Other versions of this item:
- Susan N. Houseman & Katharine G. Abraham, 1994. "Labor Adjustment Under Different Institutional Structures: A Case Study of Germany and the United States," Upjohn Working Papers and Journal Articles 94-26, W.E. Upjohn Institute for Employment Research.
- Susan N. Houseman & Katharine G. Abraham, 1993. "Labor Adjustment Under Different Institutional Structures: A Case Study of Germany and The United States," NBER Working Papers 4548, National Bureau of Economic Research, Inc.
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alan S. Blinder & Louis J. Maccini, 1991. "Taking Stock: A Critical Assessment of Recent Research on Inventories," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 73-96, Winter.
- Burdett, Kenneth & Wright, Randall, 1989. "Unemployment Insurance and Short-Time Compensation: The Effects on Layoffs, Hours per Worker, and Wages," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1479-96, December.
- Lawrence F. Katz & Bruce D. Meyer, 1988.
"Unemployment Insurance, Recall Expectations, And Unemployment Outcomes,"
NBER Working Papers
2594, National Bureau of Economic Research, Inc.
- Katz, Lawrence F & Meyer, Bruce D, 1990. "Unemployment Insurance, Recall Expectations, and Unemployment Outcomes," The Quarterly Journal of Economics, MIT Press, vol. 105(4), pages 973-1002, November.
- Topel, Robert H, 1982. "Inventories, Layoffs, and the Short-Run Demand for Labor," American Economic Review, American Economic Association, vol. 72(4), pages 769-87, September.
- Katherine G. Abraham & Susan N. Houseman, 1993.
"Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France and Belgium,"
Upjohn Working Papers and Journal Articles
93-16, W.E. Upjohn Institute for Employment Research.
- Katharine G. Abraham & Susan N. Houseman, 1994. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 59-94 National Bureau of Economic Research, Inc.
- Katharine G. Abraham & Susan N. Houseman, 1994. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," Book chapters authored by Upjohn Institute researchers, in: Rebecca M. Blank (ed.), Social Protection Versus Economic Flexibility: Is There a Trade-off?, pages 59-93 W.E. Upjohn Institute for Employment Research.
- Katharine G. Abraham & Susan N. Houseman, 1993. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," NBER Working Papers 4390, National Bureau of Economic Research, Inc.
- Soltwedel, Rudiger, 1988. "Employment problems in West Germany - the role of institutions, labor law, and government intervention," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 28(1), pages 153-219, January.
- McGinnity, Frances & Mertens, Antje, 2002. "Fixed-term contracts in East and West Germany: Low wages, poor prospects?," SFB 373 Discussion Papers 2002,72, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Lusine Lusinyan & Leo Bonato, 2007.
"Work Absence in Europe,"
IMF Staff Papers,
Palgrave Macmillan, vol. 54(3), pages 475-538, July.
- Klinger, Sabine & Wolf, Katja, 2008. "What explains changes in full-time and part-time employment in Western Germany? : a new method on an old question," IAB Discussion Paper 200807, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Kolko, Jed & Neumark, David, 2010.
"Does local business ownership insulate cities from economic shocks?,"
Journal of Urban Economics,
Elsevier, vol. 67(1), pages 103-115, January.
- Jed Kolko & David Neumark, 2010. "Does Local Business Ownership Insulate Cities from Economic Shocks?," NBER Chapters, in: Cities and Entrepreneurship National Bureau of Economic Research, Inc.
- Kolko, Jed & Neumark, David, 2009. "Does Local Business Ownership Insulate Cities from Economic Shocks?," IZA Discussion Papers 4415, Institute for the Study of Labor (IZA).
- Wolfgang Pointner, 2006. "Employment Protection Regulations and Their Impact on Employment," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 44â57.
- Reich, Michael, 2012. "The Rising Strength of Management, High Unemployment and Slow Growth: Revisiting Okunâ€™s Law," Institute for Research on Labor and Employment, Working Paper Series qt8sc8s1z1, Institute of Industrial Relations, UC Berkeley.
- Mares, Isabela, 1996. "Firms and the welfare state: the emergence of new forms of unemployment," Discussion Papers, Research Unit: Economic Change and Employment FS I 96-308, Social Science Research Center Berlin (WZB).
- repec:cdl:indrel:qt35g487jh is not listed on IDEAS
- Eger, Thomas, 2003. "Opportunistic termination of employment contracts and legal protection against dismissal in Germany and the USA," International Review of Law and Economics, Elsevier, vol. 23(4), pages 381-403, December.
- Glosser, Stuart M. & Golden, Lonnie, 1997. "Average work hours as a leading economic variable in US manufacturing industries," International Journal of Forecasting, Elsevier, vol. 13(2), pages 175-195, June.
- Lacroix, Robert, 1997. "Mondialisation, emploi et chômage," L'Actualité Economique, Société Canadienne de Science Economique, vol. 73(4), pages 629-641, dÃ©cembre.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.