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

  • Balleer, Almut

    ()

    (RWTH Aachen University)

  • Gehrke, Britta

    ()

    (University of Erlangen-Nuremberg)

  • Lechthaler, Wolfgang

    ()

    (Kiel Institute for the World Economy)

  • Merkl, Christian

    ()

    (University of Erlangen-Nuremberg)

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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7475.

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Length: 42 pages
Date of creation: Jun 2013
Date of revision:
Publication status: forthcoming in: European Economic Review
Handle: RePEc:iza:izadps:dp7475
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