Germany’s political economy has undergone a substantial transformation. After having been held up as the “sick man of Europe” at the turn of the century, it is now considered, depending on the point of view, either an “economic superstar” or a bulky elephant in the European Economic...

The key to economic reform in Germany is a significant reduction in the high costs of labour.The main factor driving up German labour costs is the funding of the extensive German welfare state through social insurance contributions that in effect operate like payroll taxes on employment. The...