What explains Germany’s exceptional labor market performance during the Great Recession of 2008-09? Contrary to accounts that emphasize employment protection legislation or government policy (i.e., short-time work), this article argues that actions by firms—embedded in ever-changing coordinative institutional structures—were crucial. Firms chose to keep rather than shed labor, a strategy induced by (i) a “toolkit” of flexible labor market instruments that had evolved incrementally over the past thirty years; (ii) wage restraint and successful internal restructuring of firms during the past decade, which fueled an export boom before the crisis. Firms thus had some margin for maneuver, using internal flexibility to protect their investment in skilled workers. These and other institutional changes driven by firms reflect a process of successful adaptation to external economic challenges, but did not fundamentally undermine Germany’s coordinated form of capitalism. The result is not a new German model that was purposefully designed; instead German firms slowly discovered new ways to cope with economic challenges.
Why do mortgage subsidies vary across countries? Until the 2000s, the U.S. and Germany provided large-scale subsidies for homeownership. Yet, their paths diverged when they faced deep economic crises at that time. While the U.S. doubled down on government support by quasi-nationalizing its mortgage market, Germany retrenched homeowner subsidies. This article argues that growth regimes shape coalitional logics that explain these contrasting outcomes. In the U.S. demand-led regime, where housing is key to growth, a bipartisan coalition entrenched mortgage subsidies to stimulate household credit and consumption. Germany’s export-led regime, where housing is less central to growth, produced a broad-based coalition that retrenched homeowner subsidies to boost competitiveness. Detailed case studies contrast the quasi-nationalization of U.S. government-sponsored enterprises (GSEs) with the retrenchment of the German “homeowner subsidy” (Eigenheimzulage).
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.