What Explains the German Labor Market Miracle in the Great Recession?
By Michal Burda, J. Hunt. Social Science Research Network, 2011
461 citations recorded by the source corpus.
Germany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss. Employers’ reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession. Another 20 percent may be explained by wage moderation. A third important element was the widespread adoption of working time accounts, which permit employers to avoid overtime pay if hours per worker average to standard hours over a window of time. We find that this provided disincentives for employers to lay off workers in the downturn. Although the overall cuts in hours per worker were consistent with the severity of the Great Recession, reduction of working time account balances substituted for traditional government-sponsored short-time work.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/ef89f3ab794d6957e0272ed16ecfbc9627cf0f2c
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In Economics and Econometrics
Citations in the corpus
- Disentangling the Effects of a Banking Crisis: Evidence from German Firms and Counties (2018, background): “Panel B of Figure 5 plots the growth rate of GDP from 2007 to 7 Burda and Hunt (2011) show that the German government’s well-known short-time work scheme did not have a strong effect on the labor market.”
- Husband’s Unemployment and Wife’s Labor Supply: The Added Worker Effect across Europe (2018, unknown): “17In fact, it is argued that short-term work has strongly contributed to the surprisingly mild response of the German labor market to the 2008-09 economic crisis, which has hardly translated in decreasing employment rates (Burda and Hunt, 2011).”
- Reforming an insider-outsider labor market: the Spanish experience (2012, methodology): “Endnotes 1This is the decomposition used by Burda and Hunt (2011), in their analysis of the German “Labor Maket Miracle” in the Great Recession, where employment losses have been much lower than expected from the output fall.”
- Macroeconomic Evaluation of Labor Market Reform in Germany (2013, unknown): “Boysen-Hogrefe, Groll, and Merkl (2010) emphasize the role of wage moderation in their analysis of the Great Recession in Germany.7 Burda and Hunt (2011) suggest that firms were reluctant to hire workers in the expansion preceding the crisis and therefore laid off fewer workers during the crisis.”