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The inefficiency of regular reliance on short-time work

Author

Listed:
  • Pierre Cahuc

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, IPP - Institut des politiques publiques)

  • Sandra Nevoux

    (Centre de recherche de la Banque de France - Banque de France)

Abstract

Short-time work makes it possible for companies faced with temporary and exceptional circumstances to receive subsidies to reduce the number of hours worked by their employees by remunerating the time off. Short-time work has both beneficial and detrimental effects. During the Great Recession of 2008-2009, there was renewed interest in short-time work as part of the fight against unemployment, particularly in France, where it underwent successive reforms. This policy brief shows that the short-time work reforms carried out after the recession have mainly benefited large firms using them on a regular basis to cope with seasonal fluctuations in business activity. This expansion of short-time work is inefficient because it subsidizes periods of inactivity, thus reducing total output. In this context, it would be desirable to introduce a bonus-malus system by which companies would fund short-time work via a tax paid over several years and that is proportional to their contribution to the cost of the scheme.

Suggested Citation

  • Pierre Cahuc & Sandra Nevoux, 2018. "The inefficiency of regular reliance on short-time work," Institut des Politiques Publiques halshs-02552884, HAL.
    • Handle: RePEc:hal:ipppap:halshs-02552884
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02552884
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