Why Was Unemployment In Germany in Recession Lower Than US?

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This study by Brookings Institute attempts to isolate the factors that contributed to Germany's better employment numbers during a recession in GDP declined more than it did in the US. We know that businesses in the US cut employment rapidly and drastically at the first signs of recession in the US. It explains the different response by business in Germany to the fact that they had not increased employment during good times prior to recession and that labor laws gave them more flexibility in assigning hours so that overtime premia were reduced.

Some economists in the US argue that safety net for workers is better than that in the US and that this kept consumer demand from falling as dramatically as it did in the US.