Working Paper: NBER ID: w23688
Authors: Russell Cooper; Moritz Meyer; Immo Schott
Abstract: We study the employment and output effects of the short-time work (STW) policy in Germany between 2009 and 2010. This intervention facilitated reductions in hours worked per employee with the goal of preventing layoffs. Using confidential German micro-level data we estimate a search model with heterogeneous multi-worker firms as a basis for policy analysis. Our findings suggest that STW can prevent increases in unemployment during a recession. However, the policy leads to a decrease in the allocative efficiency of the labor market, resulting in significant output losses. These effects arise from a reduction in the vacancy filling rate resulting from the policy intervention.
Keywords: No keywords provided
JEL Codes: E24; E32; E65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| stw policy (F13) | unemployment rate (J64) |
| stw policy (F13) | allocative efficiency of the labor market (D61) |
| stw policy (F13) | output losses (D57) |
| vacancy filling rate (J63) | output losses (D57) |
| stw policy (F13) | vacancy filling rate (J63) |