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THE EXTENSION OF SHORT-TIME WORK SCHEMES DURING THE GREAT RECESSION: A STORY OF SUCCESS?

Bjoern Brey and Matthias Hertweck

Macroeconomic Dynamics, 2020, vol. 24, issue 2, 360-402

Abstract: This paper evaluates the effectiveness of short-time work (STW) extensions—e.g., relaxing eligibility criteria or implementing new schemes—in OECD countries during 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 pre-existing STW schemes were able to fully exploit the benefits of STW. Third, the effects of STW were strongest when GDP growth was deeply negative at the beginning of the recession. In summary, our results indicate that STW is most effective when used as a fast-responding automatic stabilizer.

Date: 2020
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Working Paper: The extension of short-time work schemes during the Great Recession: A story of success? (2016) Downloads
Working Paper: The Extension of Short-time Work Schemes during the Great Recession: A Story of Success? (2016) Downloads
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