An Economy without Labor?

We need to work harder and, above all, more efficiently in this country": With this statement, German Chancellor Friedrich Merz recently sparked an important political debate that has long been present in academic circles. In this ZEW Lecture on Economic Policy, Nicola Fuchs-Schündeln will explore the causes and consequences of labor shortage in Germany, also comparing the situation here to developments in other European countries and the United States. While the trend of declining hours per worker is not unique to Germany, it is particularly pronounced here, and translates into decreasing hours per person, despite increasing employment rates. Among the causes discussed are the increasing demand for leisure time as incomes rise, as well as work disincentives created by tax systems, and decreasing fixed costs of work. Finally, the lecture will outline the implications of these developments for policymakers and businesses, highlighting possible policy implications.