Economic and social effects of the 2004 amendment to the German Crafts Code (Handwerksordnung – HwO)

The 2004 amendment has been the most extensive reform of the German Crafts Code (Handwerksordnung) up to now. Key element of the amendment was the abolition of the necessity to become a master craftsman (Meisterpflicht) in order to be permitted to manage a business, in 53 out of the total of 93 craft sections. With this reform, the German government was seeking to strengthen the economic performance of the craft sector in general, to facilitate new firm formation and to create new jobs as well as to secure existing employment. Although the amendment to the Crafts Code dates back more than ten years now, there is no sound scientific evaluation which would allow assessing the intended as well as potential other effects of the reform.

Our research project thoroughly examines the economic and social effects of the amendment on the basis of modern scientific methods. For this purpose, data sources both on the aggregate as well as on the micro levels are used. The effects of the reform on indicators such as employment, wages, training, revenues, business dynamics or innovation of the craft sector are examined.