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Inefficient Short-Time Work

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  • Cahuc, Pierre
  • Nevoux, Sandra

Abstract

This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers' contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.

Suggested Citation

  • Cahuc, Pierre & Nevoux, Sandra, 2017. "Inefficient Short-Time Work," CEPR Discussion Papers 12269, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12269
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    References listed on IDEAS

    as
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    2. Diego Restuccia & Richard Rogerson, 2017. "The Causes and Costs of Misallocation," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 151-174, Summer.
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    8. 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.
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    14. 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].
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Inefficient Short-Time Work
      by maximorossi in NEP-LTV blog on 2019-04-10 14:10:59
    2. Inefficient Short-Time Work
      by maximorossi in NEP-LTV blog on 2017-11-24 00:30:42

    Citations

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    Cited by:

    1. J. Ignacio Conde-Ruiz & Manu García & Luis A. Puch & Jesús Ruiz, 2019. "Calendar effects in daily aggregate employment creation and destruction in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 10(1), pages 25-63, March.
    2. Volker Meier, 2018. "Short-time Work Subsidies in a Matching Model," CESifo Working Paper Series 7281, CESifo.
    3. Sandra NEVOUX, 2019. "Short-time work is an efficient job-saving policy [L’activité partielle constitue une politique efficace de sauvegarde de l’emploi]," Bulletin de la Banque de France, Banque de France, issue 225.
    4. Reamonn Lydon & Thomas Y. Mathä & Stephen Millard, 2019. "Short-time work in the Great Recession: firm-level evidence from 20 EU countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-29, December.
    5. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," Sciences Po publications 12045, Sciences Po.
    6. Florentino Felgueroso & Marcel Jansen, 2020. "Una valoraciónde los ERTEpara hacer frente a la crisis del COVID-19 en basea la evidencia empírica y desde una perspectiva comparada," Policy Papers 2020-06, FEDEA.
    7. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," Working Papers hal-03393111, HAL.

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    More about this item

    Keywords

    experience rating; Short-time work; Unemployment insurance;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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