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Labor Demand During the Crisis: What Happened in Germany?

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Author Info

  • Bohachova, Olga

    ()
    (Institut für Angewandte Wirtschaftsforschung (IAW))

  • Boockmann, Bernhard

    ()
    (Institut für Angewandte Wirtschaftsforschung (IAW))

  • Buch, Claudia M.

    ()
    (IWH Halle)

Abstract

In Germany, the employment response to the post-2007 crisis has been muted compared to other industrialized countries. Despite a large drop in output, employment has hardly changed. In this paper, we analyze the determinants of German firms' labor demand during the crisis using a firm-level panel dataset. Our analysis proceeds in two steps. First, we estimate a dynamic labor demand function for the years 2000-2009 accounting for the degree of working time flexibility and the presence of works councils. Second, on the basis of these estimates, we use the difference between predicted and actual employment as a measure of labor hoarding as the dependent variable in a cross-sectional regression for 2009. Apart from total labor hoarding, we also look at the determinants of subsidized labor hoarding through short-time work. The structural characteristics of firms using these channels of adjustment differ. Product market competition has a negative impact on total labor hoarding but a positive effect on the use of short-time work. Firm covered by collective agreements hoard less labor overall; firms without financial frictions use short-time work less intensively.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6074.

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Length: 35 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:iza:izadps:dp6074

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Keywords: labor demand; economic crisis; short-time work; financial frictions; labor market institutions; employment adjustment;

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References

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  1. Boeri, Tito & Brücker, Herbert, 2011. "Short-Time Work Benefits Revisited: Some Lessons from the Great Recession," IZA Discussion Papers 5635, Institute for the Study of Labor (IZA).
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  15. Wolf Dieter Heinbach & Stefanie Schröpfer, 2007. "Typisierung der Tarifvertragslandschaft. Eine Clusteranalyse der tarifvertraglichen Öffnungsklauseln," IAW Discussion Papers 28, Institut für Angewandte Wirtschaftsforschung (IAW).
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Citations

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Cited by:
  1. Jan Babecky & Kamil Galuscak & Lubomir Lizal, 2011. "Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis," Working Papers 2011/15, Czech National Bank, Research Department.
  2. 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.
  3. Jung, Sven, 2012. "Employment adjustment in German firms," Discussion Papers 80, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  4. Scholz, Theresa, 2012. "Employers' selection behavior during short-time work," IAB Discussion Paper 201218, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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