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Short-Time Compensation: Job Security, and Employment Contracts: Evidence from Selected OECD Countries


  • Van Audenrode, Marc A


In this paper, a model of optimal employment contracting describes differences across countries in firing restrictions and short-time compensation systems for workers forced to work shorter hours to avoid layoff. The model predicts that the existence of a short-time compensation system will generate major fluctuations in working hours only if the short-time compensation system is more generous than the traditional unemployment insurance system. A test performed for ten OECD countries shows that in countries with generous short-time compensation systems, the speed of adjustment of total hours worked is higher than in the United States, despite a much slower adjustment in the number of workers employed. Copyright 1994 by University of Chicago Press.

Suggested Citation

  • Van Audenrode, Marc A, 1994. "Short-Time Compensation: Job Security, and Employment Contracts: Evidence from Selected OECD Countries," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 76-102, February.
  • Handle: RePEc:ucp:jpolec:v:102:y:1994:i:1:p:76-102

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    References listed on IDEAS

    1. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security and Work Force Adjustment: How Different are U.S. and Japanese Practices?," Book chapters authored by Upjohn Institute researchers,in: Christopher F. Buechtemann (ed.), Employment Security and Labor Market Behavior: Interdisciplinary Approaches and International Evidence, pages 180-199 W.E. Upjohn Institute for Employment Research.
    2. Nadiri, M Ishaq & Rosen, Sherwin, 1969. "Interrelated Factor Demand Functions," American Economic Review, American Economic Association, vol. 59(4), pages 457-471, Part I Se.
    3. Samuel Bentolila & Giuseppe Bertola, 1990. "Firing Costs and Labour Demand: How Bad is Eurosclerosis?," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 381-402.
    4. Topel, Robert H, 1982. "Inventories, Layoffs, and the Short-Run Demand for Labor," American Economic Review, American Economic Association, vol. 72(4), pages 769-787, September.
    5. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-957, October.
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    Cited by:

    1. Calavrezo, Oana & Duhautois, Richard & Walkowiak, Emmanuelle, 2010. "Short-Time Compensation and Establishment Exit: An Empirical Analysis with French Data," IZA Discussion Papers 4989, Institute for the Study of Labor (IZA).
    2. repec:sbe:breart:v:29:y:2009:i:2:a:3443 is not listed on IDEAS
    3. Balleer, Almut & Gehrke, Britta & Lechthaler, Wolfgang & Merkl, Christian, 2016. "Does short-time work save jobs? A business cycle analysis," European Economic Review, Elsevier, vol. 84(C), pages 99-122.
    4. Helge Braun & Björn Brügemann, 2014. "Welfare Effects of Short-Time Compensation," CESifo Working Paper Series 5063, CESifo Group Munich.
    5. Glosser, Stuart M. & Golden, Lonnie, 1997. "Average work hours as a leading economic variable in US manufacturing industries," International Journal of Forecasting, Elsevier, vol. 13(2), pages 175-195, June.
    6. Leonard, J.S. & Van Audenrode, M., 1998. "The Dynamics of Wages and Employment," Papers 9806, Laval - Recherche en Politique Economique.
    7. Lonnie Golden & Stuart Glosser, 2013. "Work sharing as a potential policy tool for creating more and better employment: A review of the evidence," Chapters,in: Work Sharing during the Great Recession, chapter 7, pages 203-258 Edward Elgar Publishing.
    8. Oana Calavrezo & Richard Duhautois & Emmanuelle Walkowiak, 2007. "The Short-Time Compensation Program in France: an Efficient Measure Against Redundancies?," Post-Print halshs-00273367, HAL.
    9. Richard Duhautois & Emmanuelle Walkowiak & Oana Calavrezo, 2009. "The Substitution of Worksharing and Short-Time Compensation in France: A Difference-in-differences Approach," Economics Bulletin, AccessEcon, vol. 29(2), pages 820-833.
    10. Cahuc, Pierre & Carcillo, Stéphane, 2011. "Is Short-Time Work a Good Method to Keep Unemployment Down?," IZA Discussion Papers 5430, Institute for the Study of Labor (IZA).
    11. repec:mpr:mprres:7756 is not listed on IDEAS
    12. Stuart Glosser & Lonnie Golden, 2005. "Is labour becoming more or less flexible? Changing dynamic behaviour and asymmetries of labour input in US manufacturing," Cambridge Journal of Economics, Oxford University Press, vol. 29(4), pages 535-557, July.
    13. Alexander Hijzen & Sébastien Martin, 2012. "The Role of Short-Time Working Schemes During the Global Financial Crisis and Early Recovery: A Cross-Country Analysis," OECD Social, Employment and Migration Working Papers 144, OECD Publishing.
    14. Scholz, Theresa, 2012. "Employers' selection behavior during short-time work," IAB Discussion Paper 201218, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Addison John T. & Teixeira Paulino, 2001. "Employment Adjustment in a “Sclerotic” Labour Market: Comparing Portugal with Germany, Spain, and the United Kingdom / Beschäftigungsanpassung in einem „sklerotischen“ Arbeitsmarkt: Ein Vergleich von ," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 221(4), pages 353-370, August.
    16. Pierre Cahuc, 2014. "Short-time work compensations and employment," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-11, May.
    17. Regt Erik R. de, 2005. "Overtime and Short-time with Fluctuating Absenteeism and Demand," Research Memorandum 026, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    18. Houle, Mario & Van Audenrode, Marc, 1995. "Job displacement, wages, and unemployment duration in Canada," Labour Economics, Elsevier, vol. 2(1), pages 77-91, March.
    19. 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.
    20. Kruppe, Thomas & Scholz, Theresa, 2014. "Labour hoarding in Germany : employment effects of short-time work during the crises," IAB Discussion Paper 201417, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    21. Stephen Walsh & Rebecca London & Deana McCanne & Karen Needels & Walter Nicholson & Stuart Kerachsky, 1997. "Evaluation of Short-Time Compensation Programs: Final Report," Mathematica Policy Research Reports 4478280a4e4f4cdeaed9a7645, Mathematica Policy Research.

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