IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11746.html
   My bibliography  Save this paper

Heterogeneous Layoff Effects of the US Short-Time Compensation Program

Author

Listed:
  • Tracey, Marlon R.

    () (Southern Illinois University Edwardsville)

  • Polachek, Solomon

    () (Binghamton University, New York)

Abstract

The Short-Time Compensation (STC) program enables US firms to reduce work hours via pro-rated Unemployment Insurance (UI) benefits, rather than relying on layoffs as a cost-cutting tool. Despite the program's potential to preclude skill loss and rehiring/ retraining costs, firms' participation rates are still very low in response to economic downturns. Using firm-level UI administrative data, we show why by illustrating which type firms benefit from the program and which do not. Semiparametric estimation indicates STC reduces layoff rates for cyclically sensitive firms by about 15%, but has no effect for more cyclically stable firms.

Suggested Citation

  • Tracey, Marlon R. & Polachek, Solomon, 2018. "Heterogeneous Layoff Effects of the US Short-Time Compensation Program," IZA Discussion Papers 11746, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11746
    as

    Download full text from publisher

    File URL: http://ftp.iza.org/dp11746.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Oana Calavrezo & Richard Duhautois & Emmanuelle Walkowiak, 2007. "The Short-Time Compensation Program in France: an Efficient Measure Against Redundancies?," Post-Print halshs-00273367, HAL.
    2. DeAngelo, Harry & DeAngelo, Linda, 1991. "Union negotiations and corporate policy *1: A study of labor concessions in the domestic steel industry during the 1980s," Journal of Financial Economics, Elsevier, vol. 30(1), pages 3-43, November.
    3. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security in America: Lessons from Germany," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number kagsnh1993, November.
    4. Andrea Ichino & Fabrizia Mealli & Tommaso Nannicini, 2008. "From temporary help jobs to permanent employment: what can we learn from matching estimators and their sensitivity?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(3), pages 305-327.
    5. repec:ags:stataj:116250 is not listed on IDEAS
    6. Peter Hall & Qi Li & Jeffrey S. Racine, 2007. "Nonparametric Estimation of Regression Functions in the Presence of Irrelevant Regressors," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 784-789, November.
    7. 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.
    8. Matias Busso & John DiNardo & Justin McCrary, 2014. "New Evidence on the Finite Sample Properties of Propensity Score Reweighting and Matching Estimators," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 885-897, December.
    9. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    10. repec:mpr:mprres:7503 is not listed on IDEAS
    11. Alberto Abadie & David Drukker & Jane Leber Herr & Guido W. Imbens, 2004. "Implementing matching estimators for average treatment effects in Stata," Stata Journal, StataCorp LP, vol. 4(3), pages 290-311, September.
    12. Stephen Walsh & Rebecca A. London & Deana McCanne & Karen Needels & Walter Nicholson & Stuart Kerachsky, 1997. "Evaluation of Short-Time Compensation Programs: Data Set," Mathematica Policy Research Reports 7b239a4765ab4852bbc552adc, Mathematica Policy Research.
    13. 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.
    14. Tito Boeri & Herbert Bruecker, 2011. "Short‐time work benefits revisited: some lessons from the Great Recession," Economic Policy, CEPR;CES;MSH, vol. 26(68), pages 697-765, October.
    15. 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.
    16. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
    17. Lutz Bellmann & Hans-Dieter Gerner & Richard Upward, 2012. "The Response of German Establishments to the 2008-2009 Economic Crisis," OECD Social, Employment and Migration Working Papers 137, OECD Publishing.
    18. repec:mpr:mprres:1805 is not listed on IDEAS
    19. Li, Qi & Racine, Jeffrey S., 2010. "Smooth Varying-Coefficient Estimation And Inference For Qualitative And Quantitative Data," Econometric Theory, Cambridge University Press, vol. 26(06), pages 1607-1637, December.
    20. repec:eee:labchp:v:2:y:1986:i:c:p:1001-1035 is not listed on IDEAS
    21. Fabio R Arico & Ulrike Stein, 2012. "Was Short-Time Work a Miracle Cure During the Great Recession? The Case of Germany and Italy," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(2), pages 275-297, June.
    22. John, Kose & Lang, Larry H P & Netter, Jeffry, 1992. " The Voluntary Restructuring of Large Firms in Response to Performance Decline," Journal of Finance, American Finance Association, vol. 47(3), pages 891-917, July.
    23. Dube, Arindrajit & Freeman, Eric & Reich, Michael, 2010. "Employee Replacement Costs," Institute for Research on Labor and Employment, Working Paper Series qt7kc29981, Institute of Industrial Relations, UC Berkeley.
    24. repec:mpr:mprres:7502 is not listed on IDEAS
    25. repec:mpr:mprres:4175 is not listed on IDEAS
    26. David M. Gray, 1998. "When Might a Distressed Firm Share Work? Evidence from the Short-Time Compensation Programme in France," British Journal of Industrial Relations, London School of Economics, vol. 36(1), pages 43-72, March.
    27. Alexander Hijzen & Danielle Venn, 2011. "The Role of Short-Time Work Schemes during the 2008-09 Recession," OECD Social, Employment and Migration Working Papers 115, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    short-time compensation; layoffs; inverse probability weighting; heterogeneity; finite mixture model;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp11746. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak). General contact details of provider: http://www.iza.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.