European Economy. Economic Papers. Germany's growth performance in the 1990's

particular, can be a reason why wages do not adjust.
Table 3.18: Total tax wedge
Germany
France
Italy
UK
Couple, no children
100 - 33
1996
46.5
46.7
48.4
27.0
2000
46.1
43.7
43.2
25.6
67 - 33
1996
41.5
43.7
45.9
20.9
2000
41.3
37.5
39.8
20.8
67 - 0
1996
36.0
43.1
45.3
24.4
2000
35.7
37.8
40.1
25.6
50 - 0
1996
33.6
43.1
42.0
18.3
2000
34.0
34.0
37.1
20.8
Single, no children
67
1996
46.5
44.3
48.3
26.7
2000
46.1
39.2
43.0
25.6
50
1996
41.5
43.1
46.0
21.5
2000
41.3
34.0
41.0
20.8
Income tax and social security contributions (employer and employee) as % of total labour cost. Earners of 100%, 67% and 33% of the
APW respectively (e.g. “100 – 33” stands for the combination where the primary earner gains the APW, while the secondary earner gains
33% of it).
Figures for 2001 are preliminary.
Source: OECD, EC (DG TAXUD)
Flexibility
Labour market turnover indicates a labour market’s capacity of adaptation, in particular in the
context of structural change. At the same time, it is the outcome of various framework
conditions on the demand and the supply side, reflecting regulations (e.g. employment
protection legislation, EPL) as well as incentives (e.g. benefit generosity).
A quite comprehensive analysis of job loss and hiring rates (Schmidt (2000)) for 1989-1991
shows 1½ to 2 times higher overall flows for West Germany as compared to France – while in
the US the flow rates are 2-3 times higher than in Germany (
op.cit.
, Tables 6 and 7)
47
. But the
German-French gap seems to have closed since. Labour market turnover
48
in 1995-2000 was
47
Furthermore, in all three countries, for men the risk of being laid off is increased when their level of education
is low, whereas the picture is less clear for women. When it comes to the probability of finding a job, men with
a low educational attainment face rather large disadvantages in West Germany and France, whereas in the US
their chances are much closer to those of the average worker.
48
In what follows, turnover is defined as monthly flows into and out of registered unemployment relative to the
level of employment. Note that this is a narrower concept than the one used by Schmidt. Moreover, job-to job

---

equal in Germany and France, at 3.1% and 3.0% respectively. Turnover rates for West Germany
had only slightly increased from 2.1% in 1975 to 2.3% in 1990 and follows the same cyclical
pattern as the unemployment rate (Figure 3.17). After re-unification, turnover has increased
somewhat faster, reflecting the higher unemployment rate, but also an increasing trend
49
.