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The German employment miracle in the Great Recession: the significance and institutional foundations of temporary working-time reductions

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  • Alexander Herzog-Stein
  • Fabian Lindner
  • Simon Sturn

Abstract

We analyse the robust performance of the German labour market in the Great Recession, and investigate to what extent cyclical reductions in productivity and working time cushioned employment losses. We present stylized facts and apply time-series techniques to estimate counterfactual developments. Our results show that the magnitude of temporary working-time reductions was extraordinarily pronounced, whereas cyclical reductions in hourly productivity were in line with historical evidence. Using detailed information on instruments for the adjustment of working time, we uncover the institutional mechanisms behind this strong reduction. While short-time work played a significant role, even more important were working-time accounts and discretionary variations in regular working time, two new instruments which gained widespread use in the decade before the Great Recession.

Suggested Citation

  • Alexander Herzog-Stein & Fabian Lindner & Simon Sturn, 2018. "The German employment miracle in the Great Recession: the significance and institutional foundations of temporary working-time reductions," Oxford Economic Papers, Oxford University Press, vol. 70(1), pages 206-224.
    • Handle: RePEc:oup:oxecpp:v:70:y:2018:i:1:p:206-224.
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    File URL: http://hdl.handle.net/10.1093/oep/gpx047
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    Citations

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    Cited by:

    1. Maarten Dossche & Andrea Gavazzi & Vivien Lewis, 2023. "Labor Adjustment and Productivity in the OECD," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 47, pages 111-130, January.
    2. Sebastian Dullien & Alexander Herzog-Stein & Peter Hohlfeld & Sven Schreiber & Silke Tober, 2020. "Schneller Ausstieg oder bedachte Lockerung? [Quick Exit or Deliberate Loosening? On the Future of Contact Restrictions in the COVID-19Crisis]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(4), pages 285-290, April.
    3. Nora Albu & Heike Joebges & Rudolf Zwiener, 2018. "Increasing competitiveness at any price?," IMK Working Paper 192-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Ellguth, Peter & Gerner, Hans-Dieter & Zapf, Ines, 2018. "Arbeitszeitkonten in Betrieben und Verwaltungen: Flexible Arbeitszeitgestaltung wird immer wichtiger (Flexible working times become more and more important)," IAB-Kurzbericht 201815, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Herzog-Stein, Alexander & Nüß, Patrick & Peede, Lennert & Stein, Ulrike, 2022. "Germany and the United States in coronavirus distress: internal versus external labour market flexibility," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 56, pages 1-11.
    6. Zvi Eckstein & Benjamin Bental & Sergei Sumkin, 2020. "What Can Be Learned From The Economic Policies Of Other Countries In Response To The Coronavirus Epidemic? Lessons From The First Wave," Israel Economic Review, Bank of Israel, vol. 18(1), pages 33-46.
    7. Sebastian Dullien & Sebastian Gechert & Alexander Herzog-Stein & Katja Rietzler & Ulrike Stein & Silke Tober & Andrew Watt, 2020. "Wirtschaftspolitische Herausforderungen 2020 Im Zeichen des Klimawandels Die Konjunkturelle Lage in Deutschland zur Jahreswende 2019/2020," IMK Report 155-2020, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    8. Bauermann, Tom, 2020. "Governmental policies to reduce unemployment during recessions: Insights from an ABM," Ruhr Economic Papers 847, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Sturn, Simon & Epstein, Gerald, 2021. "How much should we trust five-year averaging to purge business cycle effects? A reassessment of the finance-growth and capital accumulation-unemployment nexus," Economic Modelling, Elsevier, vol. 96(C), pages 242-256.
    10. Maarten Dossche & Andrea Gavazzi & Vivien Lewis, 2023. "Labor Adjustment and Productivity in the OECD," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 47, pages 111-130, January.
    11. Jong-seok Oh, 2023. "Stabilizing the Macroeconomy with Labor Market Policies," Korean Economic Review, Korean Economic Association, vol. 39, pages 205-240.
    12. Alexander Herzog-Stein & Patrick Nuess & Lennert Peede & Ulrike Stein, 2021. "Germanys Labour Market in Coronavirus Distress New Challenges to Safeguarding Employment," IMK Working Paper 209-2021, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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