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Short-Time Work schemes and labour market flows in Europe during COVID

Cristina Lafuente and Astrid Ruland
Authors registered in the RePEc Author Service: Astrid Ruland

Economics Working Papers from European University Institute

Abstract: In this paper we investigate the impact that Short-Time Work schemes (STWs) had on employment and labour market flows during the COVID emergency of 2020 in four of the five largest economies of the EU. Most European countries used STWs at this time to alleviate the negative impact of sanitary measures like lockdowns. Looking at labour market stocks and flows, we document that these schemes were widely adopted and likely prevented substantial job losses. However, they failed to protect temporary workers. Moreover, in all countries, transitions from employment to non-participation reached unprecedented levels. These flows are reverted in subsequent quarters, which implies that many workers postponed job search during the lockdown. We do not observe permanent increases in non-participation, but we document a large fall in flows between temporary and permanent jobs. We interpret this as a drop in labour market mobility. We find that vacancy posting and firm dynamics may be able to explain part of the observed differences between countries.

Keywords: labour market flows; short-time work; inactivity; labour force survey (search for similar items in EconPapers)
JEL-codes: C82 E24 J21 J60 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eec, nep-eur and nep-lab
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