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Inefficient Short-Time Work

Pierre Cahuc and Sandra Nevoux

No 2019-03, Sciences Po publications from Sciences Po

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 and nep-ias
Date: 2019-03
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Related works:
Working Paper: Inefficient Short-Time Work (2019) Downloads
Working Paper: Inefficient Short-Time Work (2018) Downloads
Working Paper: Inefficient Short-Time Work (2017) Downloads
Working Paper: Inefficient Short-Time Work (2017) Downloads
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