Klaus Zimmermann delivers keynote speech on labor market reforms
IZA World of Labor’s editor-in-chief Professor Klaus F. Zimmermann delivered the plenary lecture at the Italian Association of Labour Economists’s (AIEL) annual conference today.
The AIEL’s National Conference of Labour Economics is currently in full swing at the University of Pisa. This year’s theme focuses on European unemployment and labor market reforms, with lectures looking at factors affecting employment in specific EU states, including: points of labor market entry; and job accessibility.
Professor Zimmermann’s speech, entitled “The Economics of Labor Market Reforms,” offered an insightful analysis into the resilience of the German economy during the Great Recession, in order to offer advice to other EU countries being hit by high unemployment.
Germany’s mid-2000 labor market reforms were cited as the nation’s major means of protection during the recession. These included incentives to encourage people to look for work, such as new flexible working time rules. Werner Eichhorst’s article talks about alternatives to full-time permanent employment in more detail, showing how this can create additional job opportunities which benefit both firms and workers.
Another reform that Professor Zimmermann highlighted was the adjustment of tax and benefits levels. Robert Moffitt also discusses how these factors affect unemployment. He finds that, contrary to some arguments that benefit schemes deter people from finding work, benefit schemes allow people to maintain consumption levels and encourage them to accept lower-paid jobs that are important to overall economic growth.
Professor Zimmermann concluded that, by adopting these measures: “Germany combined structural labor market reforms with an absence of fiscal austerity.”
Due to the structural nature of the Great Recession, these structural economic reforms were necessary in combatting unemployment-inducing issues. Edward P. Lazear evaluates how policy should respond to different causes of unemployment, noting that monetary policy cannot remedy structural recessions.
Professor Zimmermann went on to suggest that other economies still suffering from the recession, such as Italy, can use Germany’s story as inspiration for their own policy reforms. He posited that a “policy mix” like that of Germany is likely to garner the best results, by including “different measures that have proven to be effective on solid empirical grounds.”
He emphasized that there was no "one-size-fits-all" solution for Europe’s member states, and that policymakers should consult the evidence to better inform their decisions.
Read more here.
Related articles:
Fixed-term contracts, by Werner Eichhorst
Unemployment benefits and unemployment, by Robert Moffitt
Structural or cyclic? Labor markets in recessions, by Edward P. Lazear
Employment protection, by Stefano Scarpetta