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Short†Time Work and Employment Stability: Evidence from a Policy Change

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  • José M. Arranz
  • Carlos García†Serrano
  • Virginia Hernanz

Abstract

This paper investigates whether short†time work (STW) programmes achieve their stated goal of being devices intended to preserve jobs and keep workers employed in times of crisis. Our identification strategy exploits a change in the financial incentives provided to employers and employees for the temporary suspension of work contracts or the reduction of working time. We use longitudinal administrative data and estimate difference†in†differences regressions and instrumental variable bivariate probit models with endogenous covariates, which try to take account of the potential endogeneity of participation in STW. Our results suggest that discretionary policy changes in the incentives of STW schemes can be effective in the short run but they lose their ability when the decline in demand and the lack of work are more permanent.

Suggested Citation

  • José M. Arranz & Carlos García†Serrano & Virginia Hernanz, 2018. "Short†Time Work and Employment Stability: Evidence from a Policy Change," British Journal of Industrial Relations, London School of Economics, vol. 56(1), pages 189-222, March.
    • Handle: RePEc:bla:brjirl:v:56:y:2018:i:1:p:189-222
    DOI: 10.1111/bjir.12250
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    1. Mario Izquierdo & Sergio Puente & Iván Auciello, 2022. "How did the duration of Spain’s furlough schemes affect their efficacy?," Economic Bulletin, Banco de España, issue 4/2022.
    2. Arranz, José M. & García-Serrano, Carlos, 2020. "Does unemployment benefit duration affect inflows into unemployment? The impact of a law change for older workers," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).

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