Goals and Tasks of the Project

As of 2014, the DFG priority programme Flexibility in Heterogeneous Labour Markets has been continued under the DFG priority programme The German Labor Market in a Globalized World.

For a longer time, a public discussion about the lack of flexibility of the German labour market and persistently high unemployment has been going on. The multifaceted modifications of the general framework have caused very different reactions on the supply and demand side of the labour market and also within labour force groups and firms. Consequently, the heterogeneity of labour market conditions concerning the skill structure of labour, professions, firms, industries and regions is growing. Problems of inflexibility that hamper and inhibit the adjustment across sub-segments are evident. These observations lead to new challenges, since the greater and more frequently emerging rigidities of the labour market have to be met in a sophisticated way.

The prior objective of the research unit is to reveal capabilities for more flexibility as well as to figure out the relations between different dimensions of heterogeneous labour markets and their flexibility. Making labour markets more flexible means to create conditions in such a way as to enable the economy to respond faster and more efficiently to new developments and challenges. The central and research leading idea is to be: Historically grown institutions have produced rigidities, particularly in the labour market, which have an impact on the adjustment of the labour force (in persons and hours), of wage compensation and of the skill level of employees. Adjustments will typically occur where restraints are lowest. This priority programme will, on the base of economic, business- and social –economic analysis, investigate the labour market theoretically and empirically (using econometrics and experiments) to gain new insights. The research programme intends thus cooperation and consolidation of economists and social scientists, whereas the main focus remains in the economic field.

Are some special cohorts (age-, skill-, profession-groups or firm-types) particularly affected or are there special restraints, so that they can't meet the requirements of more flexibility? What are the politcal opportunities to facilitate the adjustment in the labour market? What are the consequences in terms of the social disparity?

Is a flexible wage structure an alternative for a flexible labour force structure (in terms of persons and hours) or do they accompany each other? What are the reasons for and against wage flexibility considering stable and unstable employment circumstances as well as flexible and fixed working hours? How relevant are in this respect the competition structures of the markets for tradable goods and their changes?

What are the impacts of specific legal and institutional regulations (labour unions, employers' organisations, labour legislation, tax and transfer system) in Germany? What are their incentives for the flexibilization capabilities and for the distribution of the adaption burden in the labour market compared with other countries? To what extent are disfunctions in the labour markets due to the general framework? Which institutional arrangements optimally meet the flexibilization challenges and account at the same time for the individual security preferences?

What are the reasons for the emergence of new employment forms? To what extent do they respond to the flexibilization requirements?

What is the impact of the internal flexibility of firms on their human-resource management?

Are stable employment relationships the consequence of the better qualification of the labour forces, or even the prerequisite for it?

You can download a more detailed description of the research network here (PDF, not accessible, 107 KB).