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Does Short-Time Work Save Jobs? A Business Cycle Analysis

Christian Merkl (), Almut Balleer (), Britta Gehrke () and Wolfgang Lechthaler

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

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 short-time work saves jobs in recessions. In our baseline scenario the rule based component of short-time work (i.e., due to the existence of the institution) 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 (i.e., rule changes) do not have any statistically significant effect on unemployment. These effects are based on a SVAR estimation,which uses an elasticity of the German establishment panel for identification purposes. The model shows that non-effects of discretionary interventions (i.e., 100% deadweight) may be due to their low persistence.

JEL-codes: E32 E02 E24 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-mac
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Related works:
Journal Article: Does short-time work save jobs? A business cycle analysis (2016) Downloads
Working Paper: Does Short-Time Work Save Jobs? A Business Cycle Analysis (2014) Downloads
Working Paper: Does Short-Time Work Save Jobs? A Business Cycle Analysis (2013) Downloads
Working Paper: Does short-time work save jobs? A business cycle analysis (2013) Downloads
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