The German Labor Market During the Great Recession: Shocks and Institutions

38 Pages Posted: 8 Oct 2018

See all articles by Britta Gehrke

Britta Gehrke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg; Government of the Federal Republic of Germany - Institute for Employment Research (IAB); IZA Institute of Labor Economics

Wolfgang Lechthaler

Institute for the World Economy

Christian Merkl

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg; IZA Institute of Labor Economics

Date Written: September 2018

Abstract

This paper analyzes Germany's unusual labor market experience during the Great Recession. We estimate a general equilibrium model with a detailed labor market block for post-unification Germany. This allows us to disentangle the role of institutions (short-time work, government spending rules) and shocks (aggregate, labor market, and policy shocks) and to perform counterfactual exercises. We identify positive labor market performance shocks (likely caused by labor market reforms) as the key driver for the "German labor market miracle" during the Great Recession.

Keywords: Great Recession, search and matching, DSGE, short-time work, fiscal policy, business cycles, Germany

JEL Classification: E24, E32, E62, J08, J63

Suggested Citation

Gehrke, Britta and Lechthaler, Wolfgang and Merkl, Christian, The German Labor Market During the Great Recession: Shocks and Institutions (September 2018). IZA Discussion Paper No. 11858. Available at SSRN: https://ssrn.com/abstract=3261717

Britta Gehrke (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Schloßplatz 4
No Address Available, Bavaria 91054

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Regensburger Str. 104
Nuremberg, 90478
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Wolfgang Lechthaler

Institute for the World Economy ( email )

Düsternbrooker Weg 120
Kiel, D-24105
Germany

HOME PAGE: http://www.ifw-kiel.de/kiel-institute-for-the-world-economy/view?set_language=en

Christian Merkl

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Schloßplatz 4
Erlangen, Bavaria 91054
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
8
Abstract Views
34
PlumX Metrics