The Hartv IV Reforms: Germany vs France

Germany instituted a series of labor market reforms from 2003-2005, known as the Hartz Reforms.  The reforms were implemented in four rounds, with the final round, Hartz IV, implemented from January 2005. 

With the reforms, Germany's employment to population ratio increased by 7 persons per hundred, while France's stagnated at 2005 levels. (See the graph here).

Did this increase in employment show up in an increase in GDP? 

Index of GDP, France and Germany, 2004 Q4 - 2014 Q3 (2004 Q4 = 100)

Source: OECD.StatsExtracts (GDP Exp Approach, Q v prev Q, SA)

In the decade since the implementation of the Hartz reforms, Germany's GDP grew by 13.5%, while France's grew by only 8.2%, according to OECD statistics.  Germany's employment rate, as a share of persons aged 15-74, grew by 12%.  France's employment to population ratio, as noted above, was essentially flat.

Thus, we can conclude that labor market reforms in Germany are associated with higher GDP growth, although only at about half the pace of employment growth. 

Did the Hartz Reforms help German GDP growth?  The data would suggest that they did.