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Inefficient Short-Time Work

Pierre Cahuc and Sandra Nevoux

Working papers from Banque de France

Abstract: This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers’ contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.

Keywords: Short-time work; unemployment insurance; experience rating. (search for similar items in EconPapers)
JEL-codes: J63 J65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-ias, nep-lab and nep-ltv
Date: 2018
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Working Paper: Inefficient Short-Time Work (2017) Downloads
Working Paper: Inefficient Short-Time Work (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:693

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