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Employment dynamics in Germany: Lessons to be learned from the Hartz reforms

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  • Schmid, Günther
  • Modrack, Simone

Abstract

This paper sets out to explore the black box of recent employment dynamics in Germany and thus to identify positive and negative implications that might be of interest for future policymaking. The starting point of our analysis is the question as to whether recent employment growth in Germany is the result of labour market reforms or is instead a mere by-product of the general economic upswing. In order to tackle this ques-tion, we assess German employment performance over the last ten years and also compare the determinants of the latest two economic upturns (1998-2000 and 2005-2007). Guided by an analytical framework that stresses the complementarity of institu-tions responding to shocks, we examine possible factors behind employment dynamics. The following step is to sum up and discuss the major aspects of the recent German labour market reforms (the so-called Hartz reforms). Taken together, our empirical evi-dence indicates that the recent employment growth might indeed have been facilitated by the labour market reforms. The reforms have led to considerable improvements, but they also demonstrate serious shortcomings.

Suggested Citation

  • Schmid, Günther & Modrack, Simone, 2008. "Employment dynamics in Germany: Lessons to be learned from the Hartz reforms," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2008-102, Social Science Research Center Berlin (WZB).
  • Handle: RePEc:zbw:wzblpe:spi2008102
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    File URL: https://www.econstor.eu/bitstream/10419/44029/1/563796596.pdf
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    References listed on IDEAS

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    1. Thomas Cusack & Torben Iversen & Philipp Rehm, 2006. "Risks at Work: The Demand and Supply Sides of Government Redistribution," Oxford Review of Economic Policy, Oxford University Press, vol. 22(3), pages 365-389, Autumn.
    2. Richard B. Freeman, 2007. "Searching for the EU Social Dialogue Model," AIEL Series in Labour Economics,in: Nicola Acocella & Riccardo Leoni (ed.), Social Pacts, Employment and Growth. A Reappraisal of Ezio Tarantelli’s Thought, edition 1, chapter 11, pages 221-238 AIEL - Associazione Italiana Economisti del Lavoro.
    3. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    4. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
    5. Hans J. Baumgartner & Marco Caliendo, 2008. "Turning Unemployment into Self-Employment: Effectiveness of Two Start-Up Programmes," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(3), pages 347-373, June.
    6. repec:dau:papers:123456789/10091 is not listed on IDEAS
    7. Schmid, Günther, 2007. "Transitional labour markets: Managing social risks over the lifecourse," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2007-111, Social Science Research Center Berlin (WZB).
    8. David Metcalf, 2007. "Why Has the British National Minimum Wage Had Little or No Impact on Employment?," CEP Discussion Papers dp0781, Centre for Economic Performance, LSE.
    9. Rabe, Birgitta, 2000. "Implementation von Arbeitsmarktpoltik durch Verhandlungen: eine spieltheoretische Analyse," EconStor Books, ZBW - German National Library of Economics, number 122924, March.
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    Cited by:

    1. Olivier Giraud & Arnaud Lechevalier, 2009. "L'éclatement de la norme d'emploi en Allemagne et en France au tournant du siècle," Post-Print halshs-00532915, HAL.

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