Heterogeneous Layoff Effects of the US Short-Time Compensation Program

Marlon R. Tracey () and Solomon Polachek
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Marlon R. Tracey: Southern Illinois University Edwardsville

No 11746, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The Short-Time Compensation (STC) program enables US firms to reduce work hours via pro-rated Unemployment Insurance (UI) benefits, rather than relying on layoffs as a cost-cutting tool. Despite the program's potential to preclude skill loss and rehiring/ retraining costs, firms' participation rates are still very low in response to economic downturns. Using firm-level UI administrative data, we show why by illustrating which type firms benefit from the program and which do not. Semiparametric estimation indicates STC reduces layoff rates for cyclically sensitive firms by about 15%, but has no effect for more cyclically stable firms.

Keywords: inverse probability weighting; layoffs; short-time compensation; heterogeneity; finite mixture model (search for similar items in EconPapers)
JEL-codes: C21 C38 J63 J65 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2018-08
New Economics Papers: this item is included in nep-bec, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Labour, 2020, 34 (4), 399-426

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Journal Article: Heterogeneous Layoff Effects of the US Short‐Time Compensation Program (2020)
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