Journal Article
The German Labor Market During the Great Recession: Shocks and Institutions
Economic Modelling, Volume 78, 192-208
Authors
Publication Date
JEL Classification
E24
E32
E62
J08
J63
Key Words
Related Topics
Business Cycle
Business Cycle World
Fiscal Policy & National Budgets
Growth
Labor Market
Tax Policy
Welfare State
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.
