What Explains the German Labor Market Miracle in the Great Recession

摘要: Germany experienced an even deeper fall in GDP the Great Recession than United States, with little employment loss. Employers’ reticence to hire preceding expansion, associated part a lack of confidence it would last, contributed shortfall equivalent 40 percent missing decline recession. Another 20 may be explained by wage moderation. A third important element was widespread adoption working time accounts, which permit employers avoid overtime pay if hours per worker average standard over window time. We find that this provided disincentives for lay off workers downturn. Although overall cuts were consistent severity Recession, reduction account balances substituted traditional government-sponsored short-time work.