Labor Market Reforms and the Great Recession

Germany can be regarded as a showcase for labor market reforms. Moreover, its labor market responded only mildly to the Great Recession. This paper assesses the role of the labor market reforms for the latter development. Against this background, general lessons are drawn from the German experience that include, for example, placing a greater emphasis on work incentives, individual responsibility and flexibility in combination with a solid level of social cohesion. Although it is clear that there is no one-size-fits-all solution, models and approaches that are developed for a specific country context can draw upon a number of features of the German model.