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

Author

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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. Pierre Cahuc & Sandra Nevoux, 2019. "Inefficient Short-Time Work," Sciences Po publications 2019-03, Sciences Po.
    2. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2018. "When Short-Time Work Works," Sciences Po publications 2018-03, Sciences Po.
    3. Cahuc, Pierre & Nevoux, Sandra, 2017. "Inefficient Short-Time Work," CEPR Discussion Papers 12269, C.E.P.R. Discussion Papers.
    4. Pierre Cahuc & Sandra Nevoux, 2019. "Inefficient Short-Time Work," Sciences Po Economics Discussion Papers 2019-03, Sciences Po Departement of Economics.
    5. Gehrke, Britta & Hochmuth, Brigitte, 2017. "Counteracting unemployment in crises : non-linear effects of short-time work policy," IAB Discussion Paper 201727, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    Keywords

    job destruction; labor policy; short-time work; unemployment;

    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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