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Working Time Accounts and Turnover

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  • Andrey Launov

Abstract

Working time accounts are essentially bookkeeping tools that allow firms to smooth their demand for hours employed. Descriptive literature suggests that working time accounts can reduce layoffs and inhibit increases in unemployment during recessions. In a model of optimal labor demand, I show that working time accounts do not necessarily guarantee fewer layoffs at the firm level. Layoffs can fall or rise depending on whether a firm meets an economic downturn with a surplus or a deficit of hours, and on how productive the firm is. On aggregate and in expected terms, however, working time accounts reduce job destruction.

Suggested Citation

  • Andrey Launov, 2021. "Working Time Accounts and Turnover," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 1025-1056, July.
    • Handle: RePEc:bla:scandj:v:123:y:2021:i:3:p:1025-1056
    DOI: 10.1111/sjoe.12430
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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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