The paper introduces the concept of a firm's normal employment level as a weighted average of past employment levels and it analyzes the impact of an incentive scheme in which a firm receives a reward (or pays a penalty) when it deviates above (below) its normal employment level. The result is...

Germany's social security system is surveyed, its benefits and contributions are discussed. The expansion of this system in the last decades is described, its impact on employment and growth is studied and proposals for the reform of the system are discussed.