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Employment dynamics in Germany: Lessons to be learned from the Hartz reforms


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  • Schmid, Günther
  • Modrack, Simone
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    This paper sets out to explore the black box of recent employment dynamics in Germany and thus to identify positive and negative implications that might be of interest for future policymaking. The starting point of our analysis is the question as to whether recent employment growth in Germany is the result of labour market reforms or is instead a mere by-product of the general economic upswing. In order to tackle this ques-tion, we assess German employment performance over the last ten years and also compare the determinants of the latest two economic upturns (1998-2000 and 2005-2007). Guided by an analytical framework that stresses the complementarity of institu-tions responding to shocks, we examine possible factors behind employment dynamics. The following step is to sum up and discuss the major aspects of the recent German labour market reforms (the so-called Hartz reforms). Taken together, our empirical evi-dence indicates that the recent employment growth might indeed have been facilitated by the labour market reforms. The reforms have led to considerable improvements, but they also demonstrate serious shortcomings. -- Das vorliegende Papier versucht die Hintergründe der aktuellen Beschäftigungsdynamik in Deutschland aufzudecken und Implikationen für die künftige Politikgestaltung zu identifizieren. Der Ausgangspunkt der Untersuchung liegt in der Frage, ob das aktuelle Beschäftigungswachstum in Deutschland das Ergebnis der jüngsten Arbeitsmarktreformen oder lediglich ein Nebenprodukt des allgemeinen wirtschaftlichen Aufschwungs ist. Im Lichte dieser Problematik wird die deutsche Beschäftigungsperformanz der vergangenen zehn Jahre beleuchtet; außerdem werden die Bestimmungsfaktoren der letzten beiden Aufschwünge (1998-2000 und 2005-2007) miteinander verglichen. Auf Grundlage eines analytischen Rahmens, der die Komplementarität von auf Schocks reagierenden Institutionen betont, werden mögliche Erklärungen für die aktuelle Beschäftigungsdynamik diskutiert. In einem weiteren Schritt werden die wichtigsten Punkte der jüngsten deutschen Arbeitsmarktreformen (der sogenannten Hartz-Reformen) zusammengefasst und diskutiert. Alles in allem zeigt die empirische Evidenz, dass das aktuelle Beschäftigungswachstum tatsächlich von den Arbeitsmarktreformen gestützt wurde. Die Reformen führten zu beachtlichen Verbesserungen, leiden jedoch auch unter schwerwiegenden Mängeln.

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    Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Labor Market Policy and Employment with number SP I 2008-102.

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    Date of creation: 2008
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    Handle: RePEc:zbw:wzblpe:spi2008102

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    1. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
    2. Schmid, Günther, 2007. "Transitional labour markets: Managing social risks over the lifecourse," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2007-111, Social Science Research Center Berlin (WZB).
    3. Thomas Cusack & Torben Iversen & Philipp Rehm, 2006. "Risks at Work: The Demand and Supply Sides of Government Redistribution," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 22(3), pages 365-389, Autumn.
    4. Hans J. Baumgartner & Marco Caliendo, 2008. "Turning Unemployment into Self-Employment: Effectiveness of Two Start-Up Programmes," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 70(3), pages 347-373, 06.
    5. Aghion, Philippe & Caroli, Eve & García-Peñalosa, Cecilia, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Scholarly Articles 12502063, Harvard University Department of Economics.
    6. David Metcalf, 2007. "Why Has the British National Minimum Wage Had Little or No Impact on Employment?," CEP Discussion Papers, Centre for Economic Performance, LSE dp0781, Centre for Economic Performance, LSE.
    7. Richard B. Freeman, 2006. "Searching for the EU Social Dialogue Model," NBER Working Papers 12306, National Bureau of Economic Research, Inc.
    8. Hans J. Baumgartner & Marco Caliendo, 2007. "Turning Unemployment into Self-Employment: Effectiveness and Efficiency of Two Start-Up Programmes," Discussion Papers of DIW Berlin 671, DIW Berlin, German Institute for Economic Research.
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    Cited by:
    1. Olivier Giraud & Arnaud Lechevalier, 2010. "L'éclatement de la norme d'emploi en Allemagne et en France au tournant du siècle," Post-Print, HAL halshs-00532915, HAL.


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