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The Employment and Output Effects of Short-Time Work in Germany

Russell Cooper

No 613, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: We study the employment and output effects of the short-time work (STW) policy in Ger- many between 2009 and 2010. This intervention facilitated reductions in hours worked per employee with the goal of preventing layoffs. Using confidential German micro-level data we estimate a search model with heterogeneous multi-worker firms. Our findings suggest that STW can prevent increases in unemployment during a recession. However, the policy leads to a decrease in the allocative efficiency of the labor market, resulting in significant output losses.

New Economics Papers: this item is included in nep-dge, nep-eur and nep-mac
Date: 2017
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More papers in 2017 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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