Unemployment in Germany: Reasons and Remedies
63 Pages Posted: 8 Mar 2003
Date Written: February 2003
This paper discusses the reasons for the dismal labor market performance of Germany over the last three decades along with potential remedies. It argues that labor market rigidities along with a generous welfare state in conjunction with certain changes in the economic environment are important in explaining this development but cannot solely account for it. Barriers to entrepreneurship, to setting up new firms and to innovations which are prevalent on goods and capital markets also play an important role in explaining the lackluster German economic performance of which rising unemployment is only one part. Comprehensive institutional reforms are therefore called for.
Keywords: Unemployment, Germany, Labor Market Reforms, Venture Capital, Innovations
JEL Classification: E24, E44, J00
Suggested Citation: Suggested Citation