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Another Economic Miracle? The German Labor Market and the Great Recession

  • Rinne, Ulf

    ()

    (IZA)

  • Zimmermann, Klaus F.

    ()

    (IZA and University of Bonn)

The mild response of the German labor market to the worst global recession in post-war history appears as an economic miracle. In response to the crisis, Germany has shown to be a strong case of internal flexibility. We argue that important factors that have contributed to this development include the strong position of the German economy due to recent labor market reforms, the nature of the crisis affecting mainly export-oriented companies in Germany, the extension of short-time work, the behavior of social partners, and automatic stabilizers. Among these factors, we emphasize the key role of the interaction between short-time work and long-term shortages of skilled workers in sectors and regions that were particularly affected by the crisis. Although the German experience is in stark contrast to that in the United States, we identify and discuss three challenges that will be at the center of debate on both sides of the Atlantic in the future.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6250.

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Length: 29 pages
Date of creation: Dec 2011
Date of revision:
Publication status: published in: IZA Journal of Labor Policy, 2012, 1:3, [Open Access] ; reprinted as ' 'Un altro miracolo economico? Il mercato del lavoro tedesco e la grande recessione' in: Diritto delle Relazioni Industriali, 2013, 23 (2), 401-423
Handle: RePEc:iza:izadps:dp6250
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  1. Olga Bohachova & Bernhard Boockmann & Claudia M. Buch, 2011. "Labor Demand During the Crisis: What Happened in Germany?," CESifo Working Paper Series 3625, CESifo Group Munich.
  2. Eichhorst, Werner & Grienberger-Zingerle, Maria & Konle-Seidl, Regina, 2006. "Activation Policies in Germany: From Status Protection to Basic Income Support," IZA Discussion Papers 2514, Institute for the Study of Labor (IZA).
  3. Mathias Dolls & Clemens Fuest & Andreas Peichl, 2010. "Automatic Stabilizers and Economic Crisis: US vs. Europe," Cologne Graduate School Working Paper Series 01-02, Cologne Graduate School in Management, Economics and Social Sciences.
  4. Werner Eichhorst & Klaus F. Zimmermann, 2007. "And Then There Were Four...How Many (and Which) Measures of Active Labor Market Policy Do We Still Need?," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 53(3), pages 243-272.
  5. Alan B. Krueger & Jorn-Steffen Pischke, 1997. "Observations and Conjectures on the U.S. Employment Miracle," NBER Working Papers 6146, National Bureau of Economic Research, Inc.
  6. Cahuc, Pierre & Carcillo, Stéphane, 2011. "Is Short-Time Work a Good Method to Keep Unemployment Down?," IZA Discussion Papers 5430, Institute for the Study of Labor (IZA).
  7. Schneider, Hilmar & Zimmermann, Klaus F., 2010. "Agenda 2020: Strategies to Achieve Full Employment in Germany," IZA Policy Papers 15, Institute for the Study of Labor (IZA).
  8. Brenke, Karl & Rinne, Ulf & Zimmermann, Klaus F, 2011. "Short-Time Work: The German Answer to the Great Recession," CEPR Discussion Papers 8449, C.E.P.R. Discussion Papers.
  9. Olivier Bargain & Herwig Immervoll & Andreas Peichl & Sebastian Siegloch, 2012. "Distributional consequences of labor-demand shocks: the 2008–2009 recession in Germany," International Tax and Public Finance, Springer, vol. 19(1), pages 118-138, February.
  10. Christophe Hachon, 2010. "Do Beveridgian pension systems increase growth?," Journal of Population Economics, Springer, vol. 23(2), pages 825-831, March.
  11. Eichhorst, Werner & Marx, Paul, 2009. "Reforming German Labor Market Institutions: A Dual Path to Flexibility," IZA Discussion Papers 4100, Institute for the Study of Labor (IZA).
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