Germany's Short Time Compensation Program: macroeconom(etr)ic insight
AbstractShort Time Compensation [STC] was a key program in Germany to fight the crisis. However, STC is quite an old tool: in the past 100 years it has been used quite often and is very multifunctional. It stabilized employment in every kind of macroeconomic shock. After a brief look into the institutional and quantitative development of STC in Germany, this paper tries to answer the question whether STC prevents Schumpeterian creative destruction and structural change in economic downturns. With the help of a VAR-Model we can analyze interdependencies between the business cycle, STC and unemployment, finding evidence for a bridging function of STC. A closer look at the pro-cyclical average stoppage supports the thesis that most of the enterprises using STC are fundamentally economically healthy, that is, STC does not prevent structural change in downturns.
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Bibliographic InfoPaper provided by IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute in its series IMK Working Paper with number 1-2011.
Length: 16 pages
Date of creation: 2011
Date of revision:
Short Time Compensation; VAR; Paradox; structural change;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-26 (All new papers)
- NEP-HME-2011-02-26 (Heterodox Microeconomics)
- NEP-MAC-2011-02-26 (Macroeconomics)
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