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The extension of short-time work schemes during the Great Recession: A story of success?

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  • Björn Brey

    (Department of Economics, University of Konstanz, Germany)

  • Matthias S. Hertweck

    (Department of Economics, University of Konstanz, Germany)

Abstract

This paper evaluates the effectiveness of short-time work [STW] extensions — e.g. relaxing eligibility criteria or implementing new STW schemes — in the OECD during and after the Great Recession. First, we find that the dampening effect of STW on the unemployment rate diminishes at higher take-up rates. Second, only countries with preexisting STW schemes were able to fully exploit the benefits of STW. Third, the effects of STW are strongest when GDP growth is deeply negative at the beginning of recessions. Our results indicate that STW is most effective when used as a fast-responding automatic stabilizer.

Suggested Citation

  • Björn Brey & Matthias S. Hertweck, 2016. "The extension of short-time work schemes during the Great Recession: A story of success?," Working Paper Series of the Department of Economics, University of Konstanz 2016-05, Department of Economics, University of Konstanz.
  • Handle: RePEc:knz:dpteco:1605
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    Cited by:

    1. Maarten Dossche & Andrea Gavazzi & Vivien Lewis, . "Labor Adjustment and Productivity in the OECD," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    2. Cahuc, Pierre & Nevoux, Sandra, 2017. "Inefficient Short-Time Work," IZA Discussion Papers 11010, Institute of Labor Economics (IZA).
    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. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2021. "The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects," SciencePo Working papers hal-03602410, HAL.
    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. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2021. "The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects," Sciences Po Economics Discussion Papers 2021-04, Sciences Po Departement of Economics.
    7. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2018. "When Short-Time Work Works," Sciences Po Economics Discussion Papers 2018-03, Sciences Po Departement of Economics.
    8. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2018. "When Short-Time Work Works," SciencePo Working papers hal-03393127, HAL.
    9. Pierre Cahuc & Sandra Nevoux, 2019. "Inefficient Short-Time Work," Working Papers hal-03393097, HAL.
    10. Brand, Claus & Obstbaum, Meri & Coenen, Günter & Sondermann, David & Lydon, Reamonn & Ajevskis, Viktors & Hammermann, Felix & Angino, Siria & Hernborg, Nils & Basso, Henrique & Hertweck, Matthias & Bi, 2021. "Employment and the conduct of monetary policy in the euro area," Occasional Paper Series 275, European Central Bank.
    11. Britta Gehrke & Brigitte Hochmuth, 2021. "Counteracting Unemployment in Crises: Non‐Linear Effects of Short‐Time Work Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 144-183, January.
    12. 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.
    13. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," Working Papers hal-03393111, HAL.
    14. Maarten Dossche & Andrea Gavazzi & Vivien Lewis, . "Labor Adjustment and Productivity in the OECD," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    15. Pierre Cahuc & Sandra Nevoux, 2019. "Inefficient Short-Time Work," SciencePo Working papers hal-03393097, HAL.
    16. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2021. "The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects," Working Papers hal-03602410, HAL.
    17. Pierre Cahuc, 2018. "Wage Insurance, Part-Time Unemployment Insurance and Short-Time Work in the XXI Century," SciencePo Working papers hal-03393111, HAL.

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    More about this item

    Keywords

    job destruction; labor policy; short-time work; unemployment;
    All these keywords.

    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
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • 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
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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