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Reforming German Labor Market Institutions: A Dual Path to Flexibility

  • Eichhorst, Werner

    ()

    (IZA)

  • Marx, Paul

    ()

    (University of Southern Denmark)

Germany has always been one of the prime examples of institutional complementarities between social insurance, a rather passive welfare state, strong employment protection and collective bargaining that stabilize diversified quality production. This institutional arrangement was criticized for being the main cause of inferior labor market performance and increasing fiscal pressure on the welfare state while at the same time inhibiting institutional change. However, over the last 15 years, a sequence of institutional reforms has fundamentally modified the functioning of the German labor market and increased both flexibility and job creation capacities through two intimately linked processes that redefined the line between inactivity, the flexible and the standard segment of the labor market. On the one hand, policy changes facilitated the expansion of flexible or 'atypical' jobs, whereas increasing flexibility of the standard employment relationship resulted from wage moderation and working time flexibility. While at the outset of this reform sequence German had a small, but relatively egalitarian labor market, the number of jobs, but also their diversity has increased.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4100.

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Length: 33 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4100
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  1. Gilles Saint Paul, 1999. "The political economy of employment protection," Economics Working Papers 355, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Eichhorst, Werner & Konle-Seidl, Regina, 2005. "The interaction of labor market regulation and labor market policies in welfare state reform," IAB Discussion Paper 200519, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. John T. Addison & Claus Schnabel & Joachim Wagner, 2006. "The (Parlous) State of German Unions," Working Paper Series in Economics 23, University of Lüneburg, Institute of Economics.
  4. Tito Boeri & Axel Börsch-Supan & Guido Tabellini, 2001. "Would you like to shrink the welfare state? A survey of European citizens," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 7-50, 04.
  5. Peter Berg, 2008. "Working Time Flexibility in the German Employment Relations System: Implications for Germany and Lessons for the United States," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 15(2), pages 111 - 132.
  6. Ebbinghaus, Bernhard & Hassel, Anke, 1999. "Striking deals: Concertation in the reform of continental European welfare states," MPIfG Discussion Paper 99/3, Max Planck Institute for the Study of Societies.
  7. Kohaut, Susanne & Schnabel, Claus, 2006. "Tarifliche Öffnungsklauseln : Verbreitung, Inanspruchnahme und Bedeutung," Discussion Papers 41, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  8. Caliendo, Marco & Künn, Steffen & Wießner, Frank, 2008. "Die Nachhaltigkeit von geförderten Existenzgründungen aus Arbeitslosigkeit: Eine Bilanz nach fünf Jahren," IZA Discussion Papers 3880, Institute for the Study of Labor (IZA).
  9. Ebbinghaus, Bernhard, 2008. "Reforming Early Retirement in Europe, Japan and the USA," OUP Catalogue, Oxford University Press, number 9780199553396, March.
  10. Hassel, Anke & Rehder, Britta, 2001. "Institutional change in the German wage bargaining system: The role of big companies," MPIfG Working Paper 01/9, Max Planck Institute for the Study of Societies.
  11. Michael Kvasnicka, 2008. "Does Temporary Help Work Provide a Stepping Stone to Regular Employment?," NBER Working Papers 13843, National Bureau of Economic Research, Inc.
  12. Anke Hassel, 2003. "The Politics of Social Pacts," British Journal of Industrial Relations, London School of Economics, vol. 41(4), pages 707-726, December.
  13. Scharpf, Fritz W., 1997. "Employment and the welfare state: A continental dilemma," MPIfG Working Paper 97/7, Max Planck Institute for the Study of Societies.
  14. Michael Fertig & Jochen Kluve, 2006. "Alternative Beschäftigungsformen in Deutschland: Effekte der Neuregelung von Zeitarbeit, Minijobs und Midijobs," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 75(3), pages 97-117.
  15. Karl Brenke & Werner Eichhorst, 2008. "Leiharbeit breitet sich rasant aus," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 75(19), pages 242-252.
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