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

Authors

• Balleer
• A.
• Gehrke
• B.
• Lechthaler
• W.
• Merkl
• C.

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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.