Working Paper: CEPR ID: DP8449
Authors: Karl Brenke; Ulf Rinne; Klaus F. Zimmermann
Abstract: Short-time work was the 'German answer' to the economic crisis. The number of short-time workers strongly increased in the recession and peaked at more than 1.5 million. Without the extensive use of short-time work, unemployment would have risen by approximately twice as much as it actually did. Short-time work has certainly contributed to the mild response of the German labor market to the crisis, but this is likely due to the country-specific context. Although the crisis has been overcome and employment is strongly expanding, modified regulations governing shorttime work are still in place. This leads to undesired side effects.
Keywords: economic crisis; labour market policy; partially unemployed workers; short-time work compensation
JEL Codes: J65; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| short-time work (STW) (J22) | reduced unemployment rates (J68) |
| Without STW (Y70) | unemployment would have risen approximately twice as much (F66) |
| short-time work (STW) (J22) | maintaining employment levels (J68) |
| STW regulations modified (R48) | enhanced effectiveness (O36) |
| STW alleviated immediate job losses (J65) | potential structural issues in labor market (J48) |