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Germany and the United States in coronavirus distress: internal versus external labour market flexibility

Author

Listed:
  • Alexander Herzog-Stein

    (Macroeconomic Policy Institute (IMK)
    University of Koblenz-Landau)

  • Patrick Nüß

    (Kiel University)

  • Lennert Peede

    (University of Muenster)

  • Ulrike Stein

    (Macroeconomic Policy Institute (IMK))

Abstract

Germany and the United States pursued different economic strategies to minimise the impact of the Coronavirus Crisis on the labour market. Germany focused on safeguarding existing jobs through the use of internal flexibility measures, especially short-time work (STW). The United States relied on a mix of external flexibility and income protection. On this basis, we use macroeconomic time series to examine the German strategy of securing employment through internal flexibility by contrasting it with the chosen strategy in the United States. In Germany, temporary cyclical reductions in working hours are mainly driven via STW. US unemployment rose at an unprecedented rate, but unlike in previous recessions, it was mostly driven by temporary layoffs. However, a closer look at the blind spots of the chosen strategies in both countries showed that despite the different approaches, people in weaker labour market positions were less well protected by the chosen strategies.

Suggested Citation

  • Alexander Herzog-Stein & Patrick Nüß & Lennert Peede & Ulrike Stein, 2022. "Germany and the United States in coronavirus distress: internal versus external labour market flexibility," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 56(1), pages 1-22, December.
    • Handle: RePEc:spr:jlabrs:v:56:y:2022:i:1:d:10.1186_s12651-022-00316-5
    DOI: 10.1186/s12651-022-00316-5
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    More about this item

    Keywords

    Working-time reduction; Safeguarding employment; Unemployment; Internal flexibility; External flexibility; Short-time work; Temporary layoffs; Great recession; Coronavirus recession; Covid-19 pandemic;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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