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Does short-time work save jobs? A business cycle analysis

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Listed author(s):
  • Balleer, Almut
  • Gehrke, Britta
  • Lechthaler, Wolfgang
  • Merkl, Christian

Abstract

In the Great Recession most OECD countries used short-time work (publicly subsidized working time reductions) to counteract a steep increase in unemployment. We show that short-time work can actually save jobs. However, there is an important distinction to be made: while the rule-based component of short-time work is a cost-efficient job saver, the discretionary component is completely ineffective. In a case study for Germany, we use the rich data available to combine micro- and macroeconomic evidence with macroeconomic modeling in order to identify, quantify and interpret these two components of short-time work.

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File URL: http://www.sciencedirect.com/science/article/pii/S0014292115000720
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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 84 (2016)
Issue (Month): C ()
Pages: 99-122

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Handle: RePEc:eee:eecrev:v:84:y:2016:i:c:p:99-122
DOI: 10.1016/j.euroecorev.2015.05.007
Contact details of provider: Web page: http://www.elsevier.com/locate/eer

Keywords: Short-time work; Fiscal policy; Business cycles; Search and matching; SVAR;

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Find related papers by JEL classification:
  • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
  • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
  • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
  • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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