Does short-time work save jobs? A business cycle analysis

Almut Balleer, Britta Gehrke, Wolfgang Lechthaler and Christian Merkl

No 1832, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: This paper analyzes the effects of short-time work (i.e., government subsidized working time reductions) on unemployment and output fluctuations. The central question is whether the rule based component (i.e., the existence of the institution short-time work) and the discretionary component (i.e., rule changes) stabilize employment over the business cycle. In our baseline scenario the rule based component stabilizes unemployment fluctuations by 15% and output fluctuations by 7%. Given the small share of short-time work expenses in terms of GDP, the stabilization effects are large compared to other instruments such as the income tax system. By contrast, discretionary short-time work interventions do not have any statistically significant effect on unemployment. These effects are based on a structural VAR estimation which is identified using the output elasticity of short-time work estimated from German establishment paneldata. The model shows that non-effects of discretionary interventions may be due to their low persistence.

Keywords: short-time work; fiscal policy; business cycles; search-and-matching; SVAR (search for similar items in EconPapers)
JEL-codes: E24 E32 E62 J08 J63 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/71077/1/739944312.pdf (application/pdf)

Related works:
Journal Article: Does short-time work save jobs? A business cycle analysis (2016)
Working Paper: Does Short-Time Work Save Jobs? A Business Cycle Analysis (2014)
Working Paper: Does Short-Time Work Save Jobs? A Business Cycle Analysis (2013)
Working Paper: Does Short-Time Work Save Jobs? A Business Cycle Analysis (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1832

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().