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Short-time Work Subsidies in a Matching Model

Volker Meier ()

No 7281, CESifo Working Paper Series from CESifo Group Munich

Abstract: We consider positive and normative aspects of subsidizing work arrangements where subsidies are paid in time of low demand and reduced working hours so as to stabilize workers’ income. In a matching framework such an arrangement increases labor demand. Tightening eligibility to short-time work benefits tends to reduce the wage while the impact on unemployment remains ambiguous. We develop a modified Hosios condition characterizing an efficient combination of labor market tightness and short-time benefit loss rate.

Keywords: short-time work; unemployment insurance; employment subsidies (search for similar items in EconPapers)
JEL-codes: E24 H24 J41 J63 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-mac
Date: 2018
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