The Response of German Establishments to the 2008–2009 Economic Crisis

The global economic and financial crisis which began in 2008 had very different effects on the labour markets of EU economies. In particular, unemployment rose far more in some countries than in others, even after conditioning on the fall in GDP. Thus, in the words of the OECD Employment Outlook (2012), some labour markets might be described as more “resilient” than others in the face of shocks. In this chapter we propose a simple descriptive methodology which relates output shocks and job flows to hires and separations. This methodology sheds light on many of the proposed explanations for the resilience of German establishments to the crisis, in particular the role of various institutional arrangements intended to promote workplace flexibility, such as short-time-work and working time accounts. The increasing availability of detailed linked employer-employee data will enable this methodology to be applied consistently across countries. The chapter therefore serves to open up a research agenda which compares the behaviour of firms’ hiring and firing policies across countries.