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Employment Support and COVID-19: Is Working Time Reduction the Right Tool?

Author

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  • Luigi Aldieri

    (Department of Economic and Statistical Sciences, University of Salerno, 84084 Fisciano, Italy)

  • Bruna Bruno

    (Department of Economic and Statistical Sciences, University of Salerno, 84084 Fisciano, Italy)

  • Concetto Paolo Vinci

    (Department of Economic and Statistical Sciences, University of Salerno, 84084 Fisciano, Italy)

Abstract

The main objectives of this study are to take into account the effects of COVID-19 on labor market functioning, and to evaluate the effects of policies regarding working time reduction, in terms of both containing the spread of infection and economic activity. Accordingly, we describe a macroeconomic model wherein we test the effects of reducing working hours in the Keynesian unemployment framework, which comprises a fixed prices and wages regime, and a consumption demand that is dependent on salaries and autonomous demand components. Moreover, we also describe a neoclassical unemployment framework, wherein the labor market is only governed by dynamic demand forces. Theoretical results show that, according to the epidemiological phase, a reduction in working hours may be a good policy for containing the virus and improving employment in the Keynesian framework when established conditions are maintained. In the neoclassical framework, a work sharing policy will fail if some conditions do not occur, and it could cause an increase in the spread of the virus when a reduction of epidemic containment measures occurs. Employment will increase when the pandemic ends. A numerical simulation confirms that a reduction in working hours could reduce virus diffusion, but only under established, constrained parameters in both frameworks.

Suggested Citation

  • Luigi Aldieri & Bruna Bruno & Concetto Paolo Vinci, 2022. "Employment Support and COVID-19: Is Working Time Reduction the Right Tool?," Economies, MDPI, vol. 10(6), pages 1-14, June.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:6:p:141-:d:838949
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    References listed on IDEAS

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