Journal Article

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

Authors

  • Almut Balleer
  • Britta Gehrke
  • Wolfgang Lechthaler
  • Christian Merkl
Publication Date

In the Great Recession most OECD countries used short-time work (publicly subsidized working time reductions) to counteract a steep increase in unemployment. We show that short-time work can actually save jobs. However, there is an important distinction to be made: While the rule-based component of short-time work is a cost-efficient job saver, the discretionary component is completely ineffective. In a case study for Germany, we use the rich data available to combine micro- and macroeconomic evidence with macroeconomic modeling in order to identify, quantify and interpret these two components of short-time work.

Info

JEL Classification
E24, E32, E62, J08, J63

Key Words

  • Business cycles
  • fiscal policy
  • search-and-matching
  • short-time work
  • SVAR