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Does Short-Time Work Save Jobs? A Business Cycle Analysis

Author

Listed:
  • Almut Balleer
  • Britta Gehrke
  • Wolfgang Lechthaler
  • Christian Merkl

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 appears to be 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.

Suggested Citation

  • Almut Balleer & Britta Gehrke & Wolfgang Lechthaler & Christian Merkl, 2014. "Does Short-Time Work Save Jobs? A Business Cycle Analysis," CESifo Working Paper Series 4640, CESifo.
  • Handle: RePEc:ces:ceswps:_4640
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp4640.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Balleer, Almut & Gehrke, Britta & Merkl, Christian, 2014. "Some surprising facts about working time accounts and the business cycle," Kiel Working Papers 1955, Kiel Institute for the World Economy (IfW).
    2. Helge Braun & Björn Brügemann, 2014. "Welfare Effects of Short-Time Compensation," CESifo Working Paper Series 5063, CESifo.
    3. 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.
    4. Michael U. Krause & Thomas A. Lubik, 2014. "Modeling Labor Markets in Macroeconomics: Search and Matching," Working Paper 14-19, Federal Reserve Bank of Richmond, revised 15 Dec 2014.

    More about this item

    Keywords

    short-time work; fiscal policy; business cycles; search-and-matching; SVAR;

    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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