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Inefficient Short-Time Work

Author

Listed:
  • Pierre Cahuc

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR)

  • Sandra Nevoux

    (Centre de recherche de la Banque de France - Banque de France)

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.

Suggested Citation

  • Pierre Cahuc & Sandra Nevoux, 2019. "Inefficient Short-Time Work," Working Papers hal-03393097, HAL.
    • Handle: RePEc:hal:wpaper:hal-03393097
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03393097
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    References listed on IDEAS

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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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    11. 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.
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    15. Burdett, Kenneth & Wright, Randall, 1989. "Unemployment Insurance and Short-Time Compensation: The Effects on Layoffs, Hours per Worker, and Wages," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1479-1496, December.
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    Cited by:

    1. Lisa Bellmann & Lutz Bellmann & Arnd Kölling, 2023. "Flexible Use of the Large-Scale Short-Time Work Scheme in Germany during the Pandemic: Dynamic Labour Demand Models Estimation with High-Frequency Establishment Data," Economies, MDPI, vol. 11(7), pages 1-17, July.

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