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Economic reform and the political economy of the German welfare state

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  • Streeck, Wolfgang
  • Trampusch, Christine

Abstract

The key to economic reform in Germany is a significant reduction in the high costs of labour.The main factor driving up German labour costs is the funding of the extensive German welfare state through social insurance contributions that in effect operate like payroll taxes on employment. The paper discusses the political causes of the rise in non-wage labour costs since the 1970s. It then proceeds to show how a variety of opportunities for political blockade in the German political economy dim the prospect for effective reform in the foreseeable future.

Suggested Citation

  • Streeck, Wolfgang & Trampusch, Christine, 2005. "Economic reform and the political economy of the German welfare state," MPIfG Working Paper 05/2, Max Planck Institute for the Study of Societies.
    • Handle: RePEc:zbw:mpifgw:052
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. Ebbinghaus, Bernhard, 2008. "Reforming Early Retirement in Europe, Japan and the USA," OUP Catalogue, Oxford University Press, number 9780199553396.
    4. Mares,Isabela, 2003. "The Politics of Social Risk," Cambridge Books, Cambridge University Press, number 9780521534772.
    5. Hinrichs, Karl, 1998. "Reforming the public pension scheme in Germany: The end of the traditional consensus?," Working papers of the ZeS 11/1998, University of Bremen, Centre for Social Policy Research (ZeS).
    6. Mares,Isabela, 2003. "The Politics of Social Risk," Cambridge Books, Cambridge University Press, number 9780521827416.
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    Citations

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    Cited by:

    1. W. Eichhorst & M. Grienberger-Zingerle & R. Konle-Seidl, 2008. "Activation Policies in Germany: From Status Protection to Basic Income Support," Springer Books, in: Werner Eichhorst & Otto Kaufmann & Regina Konle-Seidl (ed.), Bringing the Jobless into Work?, pages 17-67, Springer.
    2. Eichhorst, Werner & Kaiser, Lutz C., 2006. "The German Labor Market: Still Adjusting Badly?," IZA Discussion Papers 2215, Institute of Labor Economics (IZA).
    3. Ebbinghaus, Bernhard & Eichhorst, Werner, 2006. "Employment Regulation and Labor Market Policy in Germany, 1991-2005," IZA Discussion Papers 2505, Institute of Labor Economics (IZA).
    4. Jesús Fernández-Villaverde & Luis Garicano & Tano Santos, 2013. "Political Credit Cycles: The Case of the Eurozone," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 145-166, Summer.
    5. Eichhorst, Werner, 2007. "Der Arbeitsmarkt in Deutschland: Zwischen Strukturreformen und sozialpolitischem Reflex," IZA Discussion Papers 3194, Institute of Labor Economics (IZA).
    6. Höpner, Martin, 2007. "Coordination and organization: The two dimensions of nonliberal capitalism," MPIfG Discussion Paper 07/12, Max Planck Institute for the Study of Societies.
    7. Hörnig, Lukas, 2023. "Regional employment effects of the Hartz-reforms," Ruhr Economic Papers 1033, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Claes Belfrage & Magnus Ryner, 2009. "Renegotiating the Swedish Social Democratic Settlement: From Pension Fund Socialism to Neoliberalization," Politics & Society, , vol. 37(2), pages 257-287, June.
    9. Streeck, Wolfgang, 2007. "Endgame? The Fiscal Crisis of the German State," MPIfG Discussion Paper 07/7, Max Planck Institute for the Study of Societies.
    10. Lane Kenworthy, 2010. "The High-Employment Route to Low Inequality," LIS Working papers 538, LIS Cross-National Data Center in Luxembourg.
    11. Kemmerling, Achim & Neugart, Michael, 2009. "Financial market lobbies and pension reform," European Journal of Political Economy, Elsevier, vol. 25(2), pages 163-173, June.
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    13. Bruno Palier & Kathleen Thelen, 2010. "Institutionalizing Dualism: Complementarities and Change in France and Germany," Politics & Society, , vol. 38(1), pages 119-148, March.
    14. Miroslav Verbič & Rok Spruk, 2019. "Political economy of pension reforms: an empirical investigation," European Journal of Law and Economics, Springer, vol. 47(2), pages 171-232, April.
    15. Eichhorst, Werner, 2007. "The Gradual Transformation of Continental European Labor Markets: France and Germany Compared," IZA Discussion Papers 2675, Institute of Labor Economics (IZA).
    16. Baptiste Françon, 2013. "Who turned their back on the SPD? Electoral disaffection with the German Social Democratic Party and the Hartz reforms," Post-Print halshs-00973879, HAL.
    17. Anna ZÄ…bkowicz, 2023. "Four Sides of the Coin: The Interplay of Interests in German and Polish Pension Industries," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(2), pages 269-289, June.
    18. Eichhorst, Werner & Wintermann, Ole, 2005. "Generating Legitimacy for Labor Market and Welfare State Reforms: The Role of Policy Advice in Germany, the Netherlands, and Sweden," IZA Discussion Papers 1845, Institute of Labor Economics (IZA).

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