Can We Explain German and French Trajectories in the 2000s by Their Institutional Setting During Fordism?

A common explanation to German economic success for 10 years has been its ability to reform its labour institutions: from 1990, the percentage of firms abiding by the traditional sectoral contracting wage-setting system decreased significantly, allowing new firms to pay lower wages. This increasing heterogeneity of firms would explain, to some extent, the rising wage inequality observed in Germany for 25 years (Dustmann et al. 2009; Card et al. 2013). The Hartz laws (2003–2005) were also supposed to strengthen labour market flexibility by reducing reservation wage and implementing active labour market policy, by creating mini-jobs, etc. (Eichhorst and Marx 2009. The adoption of working time accounts also allowed to adjust employment volume by working hours rather than hiring and firing (Burda and Hunt 2011; Blot et al. 2015). This widespread set of reforms implemented by Germany would explain how Germany managed to cross the subprime crises without lasting fall of employment. This success also contrasts with “sclerotic” French economy, unable, according to many economists, to evolve so as to take globalization constraints into account and to reform its institutions (Hairault 2015) or to promote trust and cooperation (Aghion et al. 2010).