Making Labor Market Reforms Work for Everyone: Lessons from Germany

Author
Jacob Funk Kirkegaard
Content Type
Policy Brief
Institution
Peterson Institute for International Economics
Abstract
Mark Twain once wrote an essay about the difficulties of learning what he called "The Awful German Language." Similar barriers to comprehension seem to plague those trying to explain recent German economic performance. By most measures, Germany has the best functioning labor market among large economies in the West, with levels of employment reaching those in the United States at the end of the turbo-charged 1990s. A debate has stirred, however, about whether this success has come with a price—specifically, whether Germany's domestic structural reforms have lowered living standards for Germany's low income workers and worsened income inequality and whether Germany is fortuitously and perhaps selfishly riding a wave of strong foreign demand for German exports.
Topic
Economics, Industrial Policy, International Trade and Finance, Markets, Labor Issues
Political Geography
United States, Europe, Germany