Monday, 24 December 2012

The Two German Labour Market Miracles: Blueprints for Tackling the Unemployment Crisis?

an article by Holger Bonin (Centre for European Economic Research (ZEW), Mannheim, Germany, University of Kassel, Germany and IZA, Bonn, Germany) published in Comparative Economic Studies Volume 42 issue 4 (December 2012)


The article reviews the factors underlying Germany’s exceptional labour market performance since 2005. It attributes labour market turnaround to powerful social reforms strengthening labour supply and effectiveness of public employment services, assisted by cooperative social partners moderating wage growth.

In the great recession, ongoing transition to low-unemployment equilibrium, peculiarities in the export cycle, and private arrangements supporting labour hoarding, rather than discrete policy changes, kept employment at unpredicted levels. While these features scarcely transfer to other circumstances, the policies that evidently lifted Germany to lasting higher employment levels may provide valuable blueprints for countries struggling with current structural unemployment crises.

JEL Classifications: J21, J68, O52

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