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Inefficient Short-Time Work

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  • Cahuc, Pierre
  • Nevoux, Sandra

Abstract

This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers' contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.

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  • Cahuc, Pierre & Nevoux, Sandra, 2017. "Inefficient Short-Time Work," CEPR Discussion Papers 12269, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12269
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    1. Lutz Bellmann & Hans-Dieter Gerner & Richard Upward, 2015. "The Response of German Establishments to the 2008–2009 Economic Crisis," Dynamic Modeling and Econometrics in Economics and Finance, in: Pasquale Commendatore & Saime Kayam & Ingrid Kubin (ed.), Complexity and Geographical Economics, edition 127, pages 165-207, Springer.
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    7. Brey, Björn & Hertweck, Matthias S., 2020. "The Extension Of Short-Time Work Schemes During The Great Recession: A Story Of Success?," Macroeconomic Dynamics, Cambridge University Press, vol. 24(2), pages 360-402, March.
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    10. Kenneth A. Couch & Douglas J. Besharov & David Neumark, 2013. "Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 142-171, January.
    11. Lutz Bellmann & Hans-Dieter Gerner, 2011. "Reversed Roles? Wage and Employment Effects of the Current Crisis," Research in Labor Economics, in: Who Loses in the Downturn? Economic Crisis, Employment and Income Distribution, pages 181-206, Emerald Group Publishing Limited.
    12. Pasquale Commendatore & Saime Kayam & Ingrid Kubin (ed.), 2015. "Complexity and Geographical Economics," Dynamic Modeling and Econometrics in Economics and Finance, Springer, edition 127, number 978-3-319-12805-4, July-Dece.
    13. Katharine G. Abraham & Susan N. Houseman, 2014. "Short-Time Compensation as a Tool to Mitigate Job Loss? Evidence on the U.S. Experience During the Recent Recession," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(4), pages 543-567, October.
    14. Kruppe, Thomas & Scholz, Theresa, 2014. "Labour hoarding in Germany : employment effects of short-time work during the crises," IAB-Discussion Paper 201417, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Oana Calavrezo & François Lodin, 2012. "Short-Time Working Arrangements in France During the Crisis: An Empirical Analysis of Firms and Employees," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(2), pages 299-320, June.
    16. Alexander Hijzen & Sebastien Martin, 2013. "The role of short-time work schemes during the global financial crisis1 and early recovery: a cross-country analysis," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-31, December.
    17. Katharine G. Abraham & Susan N. Houseman, 1994. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 59-94, National Bureau of Economic Research, Inc.
    18. Cahuc, Pierre & Carcillo, Stéphane, 2011. "Is Short-time Work a Good Method to Keep Unemployment Down?," CEPR Discussion Papers 8214, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Inefficient Short-Time Work
      by maximorossi in NEP-LTV blog on 2019-04-10 14:10:59
    2. Inefficient Short-Time Work
      by maximorossi in NEP-LTV blog on 2017-11-24 00:30:42

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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    Cited by:

    1. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," Working Papers hal-03881650, HAL.
    2. Reamonn Lydon & Thomas Y. Mathä & Stephen Millard, 2019. "Short-time work in the Great Recession: firm-level evidence from 20 EU countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-29, December.
    3. J. Ignacio Conde-Ruiz & Manu García & Luis A. Puch & Jesús Ruiz, 2019. "Calendar effects in daily aggregate employment creation and destruction in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 10(1), pages 25-63, March.
    4. Volker Meier, 2018. "Short-time Work Subsidies in a Matching Model," CESifo Working Paper Series 7281, CESifo.
    5. Tito Boeri & Pierre Cahuc, 2022. "Labor Market Insurance Policies in the XXI Century," SciencePo Working papers Main hal-03878719, HAL.
    6. Sandra NEVOUX, 2019. "Short-time work is an efficient job-saving policy [L’activité partielle constitue une politique efficace de sauvegarde de l’emploi]," Bulletin de la Banque de France, Banque de France, issue 225.
    7. Eichhorst, Werner & Marx, Paul & Rinne, Ulf & Brunner, Johannes, 2022. "Job Retention Schemes during COVID-19: A Review of Policy Responses," IZA Policy Papers 187, Institute of Labor Economics (IZA).
    8. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," Sciences Po publications 12045, Sciences Po.
    9. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," SciencePo Working papers Main hal-03881650, HAL.
    10. Florentino Felgueroso & Marcel Jansen, 2020. "Una valoraciónde los ERTEpara hacer frente a la crisis del COVID-19 en basea la evidencia empírica y desde una perspectiva comparada," Policy Papers 2020-06, FEDEA.
    11. Nathan Vieira, 2022. "The role of the financial constraint in STW policy success during and after the Great Recession," French Stata Users' Group Meetings 2022 13, Stata Users Group.
    12. repec:hal:spmain:info:hdl:2441/42uqs7948j8nfahfgmbdn90hje is not listed on IDEAS
    13. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," SciencePo Working papers Main hal-03393111, HAL.
    14. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," Working Papers hal-03393111, HAL.
    15. Bennedsen, Morten & Larsen, Birthe & Schmutte, Ian M. & Scur, Daniela, 2023. "The effect of preserving job matches during a crisis," Labour Economics, Elsevier, vol. 84(C).
    16. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," SciencePo Working papers hal-03393111, HAL.

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    More about this item

    Keywords

    Short-time work; Unemployment insurance; Experience rating;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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