Are Labour Market Reforms the Answer to Post-Euro Crisis Management? Reflections on Germany’s Hartz Reforms

  • Chih-Mei LuoEmail author


In its 2015 official report on growth and employment, the European Commission indicates that the EU economy would be characterized by slow growth and high but stable unemployment. The Commission therefore suggests that reforms supporting well-functioning labour markets must take and continue in order to effectively reduce unemployment. Labour market reforms, following austerity and fiscal discipline, seemingly become another recipe for recovering the eurozone economy in the EU’s post-euro crisis management. With both monetary and fiscal policies reaching their limits and unemployment still at high levels in some EU members, labour market reforms are expected to be the major, if not the last, resort that policy-makers can turn to. As the European Central Bank (ECB) indicates in its report (2012: 10), a comprehensive strategy of labour market reforms is key to solid economic recovery.


  1. Beissinger, Thomas, Nathalie Chusseau and Joel Hellier (2016), ‘Offshoring and labour market reforms in Germany: Assessment and policy implications’, Economic Modelling, 53: 314–33.CrossRefGoogle Scholar
  2. Biewen, Martin and Andos Juhasz (2012), ‘Understanding rising income inequality in Germany’, The Review of Income and Wealth, 58(4): 622–47.CrossRefGoogle Scholar
  3. Bloomberg Business (2013), ‘Merkel cites East Germany lessons for EU’s problem states’, 19 February 2013, available at, accessed 10 March 2016.
  4. Bonin, Holger (2012), ‘The two German labour market miracles: Blueprints for tacking the unemployment crisis’, Comparative Economic Studies, 54:787–807.CrossRefGoogle Scholar
  5. Bornhorst, Fabian and Ashoka Mody (2012), ‘Tests of German resilience’, IMF Working Paper, No. WP/12/239, Washington, DC: IMF.Google Scholar
  6. Bouvard, Flore, Laurence Rambert, Lucile Romanello, and Nicolas Studer (2013), ‘How have the Hartz reforms shaped the German labour market?’, Tresor-Economics, No. 110, Paris: The Ministry of Economy and Finance and the Ministry of Foreign Trade of the French Government.Google Scholar
  7. Burda, Michael C. and Jennifer Hunt (2011), ‘What explains the German labour market miracle in the Great Recession?’, NBER Working Paper Series, Working Paper 17187, Cambridge, MA: National Bureau of Economic Research.Google Scholar
  8. Busl, Claudia and Atilim Seymen (2013), ‘The German labour market reforms in a European context: A DSGE analysis’, ZEW Discussion Paper No. 13-097, Mannheim, Germany: Centre for European Economic Research (ZEW).Google Scholar
  9. Caliendo, Marco and Jens Hogenacker (2012), ‘The German labour market after the Great Recession: Successful reforms and future challenges’, IZA Discussion Paper Series, IZA DP No. 6810, Bonn: The Institute for the Study of labour (IZA).CrossRefGoogle Scholar
  10. Carlin, Wendy and David Soskice (2009), ‘German economic performance: Disentangling the role of supply-side reforms, macroeconomic policy and coordinated economy institutions’, Socio-Economic Review, 7(1): 67–99.CrossRefGoogle Scholar
  11. Dlugosz, Stephan, Gesine Stephan, and Ralf A. Wilke (2014), ‘Fixing the leak: Unemployment incidence before and after a major reform of unemployment benefits in Germany’, German Economic Review, 15(3): 329–52.CrossRefGoogle Scholar
  12. Dustmann, Christian, Bernd Fitzenberger, Uta Schonberg, and Alexandra Spitz-Oener (2014), ‘From sick man of Europe to economic superstar: Germany’s resurgent economy’, Journal of Economic Perspectives 28(1): 167–88.CrossRefGoogle Scholar
  13. Eichhorst, Werner (2012), ‘The unexpected appearance of a new German model’, IZA Discussion Paper Series, IZA DP No. 6625, Bonn: The Institute for the Study of Labor (IZA).Google Scholar
  14. Engbom, Niklas, Enrica Detragiache and Faezeh Raei (2015), IMF Working Paper: The German Labor market Reforms and Post-unemployment Earnings, Washington, DC: IMF.Google Scholar
  15. EU Business (2016), ‘German Commissioner Oettinger voices fears of EU “collapse”’, 1 January 2016, available at, accessed 14 March 2016.
  16. EU Observer (2015), ‘EU unemployment and social problems will take years to fix’, 15 January 2015, available at, accessed 10 March 2016.
  17. ——— (2016), Junker urged to revive “social Europe” model’, “The French protest that wants to redefine politics”, 11 April 2016, available at, accessed 11 April 2016.
  18. European Central Bank (2012), Euro Area Labour Markets and the Crisis, Occasional Paper Series No 138, Frankfurt: ECB.Google Scholar
  19. European Commission (2016), Commission Staff Working Document: Country Report Germany 2016, Brussels: European Commission.Google Scholar
  20. Fahr Rene and Uwe Sunde (2009), ‘Did the Hartz reforms speed-up the matching process? A macro-evaluation using empirical matching functions’, German Economic Review, 10(3): 284–316.CrossRefGoogle Scholar
  21. Fertig, Michael, and Christoph M. Schmidt, and Hilmar Schneider (2006), ‘Active labor market policy in Germany—Is there a successful policy strategy?’ Regional Science and Urban Economics 36 (3): 399–430.CrossRefGoogle Scholar
  22. Geishecker, Ingo (2001), ‘Does outsourcing to Central and Easter Europe really threaten manual workers’ jobs in Germany?’, The World Economy, 29 (5): 559–83.CrossRefGoogle Scholar
  23. Giannelli, Gianna C., Ursula Jaenichen and Thomas Rothe (2013), ‘Doing well in reforming the labour market? Recent trends in job stability and wages in Germany’, IZA Discussion Paper Series, IZA DP No. 7580, Bonn: The Institute for the Study of Labor (IZA).Google Scholar
  24. Hassel, Anke (2014), ‘The paradox of liberalization—Understanding dualism and the recovery of the German political economy’, British Journal of Industrial Relations 52(1): 57–81.CrossRefGoogle Scholar
  25. Hertweck, Matthias and Oliver Sigrist (2013), ‘The aggregate effects of the Hartz reforms in Germany’, SOEP Papers on Multidisciplinary Panel Data Research, Berlin: German Socio-Economic Panel Study (SOEP).Google Scholar
  26. Hufner, Felix, and Caroline Klein (2012), ‘The German labour market’, OECD Economics Department Working Papers No. 983, Paris: OECD.Google Scholar
  27. Jacobi, Lena and Jochen Kluve (2007), ‘Before and after the Hartz reforms: The performance of active labour market policy’, Journal for Labor Market Research, 40 (1): 45–64.Google Scholar
  28. Kirkegaard (2014), ‘Making labor market reforms work for everyone: Lesson from Germany’, Policy Brief, Number PB14-1. Washington, DC: Peterson Institute for International Economics.Google Scholar
  29. Klinger, Sabine and Thomas Rothe (2010), ‘The impact of labour market reforms and economic performance on the matching of short-term and long-term unemployed’, IAB Discussion Paper 13/2010, Berlin: The Research Institute of the Federal Employment Agency (IAB).Google Scholar
  30. Krause, Michael and Harald Uhlig (2012), ‘Transitions in the German labor market: Structure and crisis’, Journal of Monetary Economics 59: 64–79.CrossRefGoogle Scholar
  31. Krebs, Tom and Martin Scheffel (2013), ‘Macroeconomic evaluation of labor market reform in Germany’, IMF Economic Review, Washington, DC: IMF.CrossRefGoogle Scholar
  32. Launov, Audrey and Klaus Walde (2013), ‘Estimating incentive and welfare effects of nonstationary unemployment benefits’, International Economic Review 54(4): 1159–98.CrossRefGoogle Scholar
  33. Moller, Joachim (2010), ‘The German labor market response in the world recession-de-mystifying a miracle’, Journal of Labour Market Research, 42(4): 325–36.Google Scholar
  34. OECD (2009), Tackling the Job Crisis: The Labour Market and Social Policy Response, Paris: OECD.Google Scholar
  35. ——— (2012), Economic Survey of Germany, Paris: OECD.Google Scholar
  36. Pall, Alan (2015), ‘Youth worst affected by labour market gaps’, published on EU Observer, 29 May 2015, available at, accessed 6 April 2016.
  37. Poilly, Celine and Dennis Wesselbaum (2014), ‘Evaluating labor market reforms: A normative analysis’, Journal of Macroeconomics, 39: 156–70.CrossRefGoogle Scholar
  38. Reisenbichler, Alexander and Kimberly J. Morgan (2012), ‘From “sickman” to “miracle”: Explaining the robustness of the German labor market during and after the financial crisis 2008–09’, Politics and Society 40(4): 549–79.Google Scholar
  39. Rinne, Ulf and Klaus F. Zimmermann (2012), ‘Another economic miracle? The German labor market and the Great Recession’, IZA Journal of Labor Policy, 1 (3): 1–21.CrossRefGoogle Scholar
  40. ——— (2013), ‘Is Germany the North Star of labor market policy?’, IZA Discussion Paper No. 7260, Bonn: Institute for the Study of Labor (IZA).Google Scholar
  41. Sinn, Hans-Werner (2006), ‘The pathological export boom and bazaar effect: How to solve the German puzzle’, The World Economy, 29 (9): 1157–75.CrossRefGoogle Scholar
  42. Spermann, Alexander (2015), ‘How to fight long-term unemployment: Lessons from Germany’, IZA Journal of Labor Policy, 4:1–15.Google Scholar
  43. The Economist (2004), ‘Europe: Germany on the mend’, 17 November 2004, available at, accessed 20 October 2015.
  44. Whyte, Philip (2010), ‘Why Germany is not a model for the eurozone’, Centre for European Reform Essays, London: Centre for European Reform.Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  1. 1.Public Administration and PolicyNational Taipei UniversityNew Taipei CityTaiwan

Personalised recommendations