Working Paper: CEPR ID: DP16168
Authors: Pierre Cahuc; Francis Kramarz; Sandra Nevoux
Abstract: This paper investigates the adoption of short-time work by firms and their enrolled workers. We provide a model which shows that short-time work can save jobs in firms facing severe negative revenue shocks but not in less affected firms, where hours are reduced without saving jobs. Analyzing data from all French establishments during the 2008-2009 Great Recession, we find that short-time work saved jobs and increased hours worked in firms with significant negative shocks, enabling rapid post-recession recovery. We also identify substantial windfall effects, increasing the policy’s cost per job saved. Nonetheless, short-time work is more cost-efficient at saving jobs than wage subsidies, ultimately resulting in a negative net cost to public finances.
Keywords: short-time work; employment; hours of work
JEL Codes: E24; J22; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| short-time work take-up (J22) | saves jobs (J68) |
| revenue shock severity (H27) | short-time work take-up (J22) |
| short-time work (J22) | increase in hours worked (J22) |
| short-time work subsidy (J65) | increase in employment (J68) |
| smaller revenue shocks (H29) | no detectable short-term effect on employment (J68) |
| short-time work (J22) | reduced hours worked (J22) |
| short-time work (J22) | policy costs (E64) |