Is Germany the North Star of Labor Market Policy?
31 Pages Posted: 16 Mar 2013
Germany's recovery from an unemployment disease and its resilience to the Great Recession is remarkable. Its success story makes it a showcase for labor policy and labor market reforms. This paper assesses the potential of the German experience as a model for effective, evidence-based policymaking. Flexible management of working time (through overtime and short-time work, time accounts and labor hoarding), social cohesion and controlled unit labor costs, combined with a rigid, incentive-oriented labor policy supported by effective program evaluation, define the characteristics of a strong reference model. Austerity, sometimes seen as core to the German model, is not viewed as a key element.
Keywords: labor market reforms, labor policy, unemployment, Great Recession, Germany, austerity
JEL Classification: J68, J21, P52, O57
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