Reforms are too important to be left to reformers

a column by Nauro Campos, Paul De Grauwe and Yuemei Ji for VOX: CEPR’s Policy Portal

The tragedy of structural reforms is that they have been captured by policymakers.

This column argues that the incessant repetition of the ‘must-reform’ mantra as a solution to the crisis has discouraged academic economists from embracing it as the important research topic it clearly is, and attempts to address the lack of adequate knowledge which makes the implementation of reforms more difficult and limits their effectiveness.

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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)

Abstract

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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