IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Much Ado about Nothing? Recent Labour Market Reforms in Germany – a Preliminary Assessment

Listed author(s):
  • Gustav Horn


    (Macroeconomic Policy Institute (IMK) at the Hans Böckler Foundation in Düsseldorf, Germany)

  • Camille Logeay

    (Macroeconomic Policy Institute (IMK) at the Hans Böckler Foundation in Düsseldorf, Germany)

  • Katja Rietzler

The article examines the macroeconomic effects of the recent labour market reforms in Germany. The reforms increased the downward pressure on wages and led to rising income inequality. Many German economists welcomed this effect, because they consider lower wages and higher wage dispersion major prerequisites for stronger employment growth. The theoretical analysis shows that a strategy of wage restraint might make sense in a small open economy, where exports play a dominating role. However, in a large and less open economy the negative effects of wage restraint on domestic demand are likely to outweigh the positive effects of enhanced competitiveness as could be observed in Germany in recent years. A comparison of the most recent two upswings confirms that the labour intensity of growth has not risen since the reforms. At the same time German wage restraint has contributed to increasing trade imbalances in the euro area.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Article provided by Rainer Hampp Verlag in its journal Management Revue - The international Review of Management Studies.

Volume (Year): 19 (2008)
Issue (Month): 3 ()
Pages: 161-178

in new window

Handle: RePEc:rai:mamere:doi_10.1688/1861-9908_mrev_2008_3_horn
Contact details of provider: Web page:

Order Information: Postal: Rainer Hampp Verlag, Journals, Vorderer Lech 35, 86150 Augsburg, Germany. A subscripton is required to access pdf files. Pay per article is available at
Web: Email:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:rai:mamere:doi_10.1688/1861-9908_mrev_2008_3_horn. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rainer Hampp)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.