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Employment and Welfare Effects of Short-Time Work in Germany

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  • Niedermayer, Kilian
  • Tilly, Jan

Abstract

We study the employment and welfare effects of short-time work in Germany during the recession between 2008 and 2010. Using a unique matched employer-employee data set that contains the universe of workers and employers for the metropolitan area of Nuremberg, we document the intensive and extensive margin of short-time work. We then develop and estimate an equilibrium search model in which worker-firm matches are subject to productivity shocks that differ in expected duration. After observing the realization of productivity, a worker-firm match decides whether to work full-time, lay off the worker, or use short-time work. Employed workers accumulate human capital whereas unemployed workers' human capital depreciates. Laid off workers can be recalled by their previous employers. We find that for every four workers on short-time work, one job was saved during the recession.

Suggested Citation

  • Niedermayer, Kilian & Tilly, Jan, 2016. "Employment and Welfare Effects of Short-Time Work in Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145842, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc16:145842
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    Cited by:

    1. Russell Cooper, 2017. "The Employment and Output Effects of Short-Time Work in Germany," 2017 Meeting Papers 613, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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