Germany's social-economic model and the euro crisis

Vol. 33 No. 1 (2013)

Jan-Mar / 2013
Published January 1, 2013

How to Cite

Dauderstädt, Michael. 2013. “Germany’s Social-Economic Model and the Euro Crisis”. Brazilian Journal of Political Economy 33 (1):3-16.

Germany's social-economic model and the euro crisis

Michael Dauderstädt
Director of the Division for Economic and Social Policy of the Friedrich-Ebert-Stiftung.
Brazilian Journal of Political Economy, Vol. 33 No. 1 (2013), Jan-Mar / 2013, Pages 3-16


Germany’s socio-economic model, the “social market economy”, was established in West Germany after World War two and extended to the unified Germany in 1990. During a prolonged recession after the adoption of the Euro in 1998, major reforms (Agenda 2010) were introduced which many consider as the key of Germany’s recent success. The reforms had mixed results: Employment increased but has consisted to a large extent of precarious low-wage jobs. Growth depended on export surpluses based on an internal real devaluation (low unit labour costs) which make Germany vulnerable to global recessions as in 2009. Overall inequality increased substantially. 

JEL Classification: J50; N14; O52; P16.

Keywords: Germany corporatism reforms