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Short-Time Work Extensions

Author

Listed:
  • Christina Brinkmann

    (University of Bonn)

  • Simon Jäger

    (Massachusetts Institute of Technology (MIT), NBER & CEPR)

  • Moritz Kuhn

    (University of Mannheim & CEPR)

  • Farzad Saidi

    (University of Bonn & CEPR)

  • Stefanie Wolter

    (IAB Nuremberg)

Abstract

Governments use short-time work (STW) schemes to subsidize job preservation during crises. We study the take-up of STW and its effects on worker outcomes and firm behavior using German administrative data from 2009 to 2021. Establishments utilizing STW tend to have higher wages, be larger, and have falling employment even before STW take-up. More adverse selection occurred during the COVID-19 pandemic. Within firms, STW is targeted towards workers likely to stay even in the absence of STW. To study the effects of STW, we examine two dimensions of policy variation: STW eligibility and extensions of potential benefit duration (PBD). Workers above retirement age, ineligible for STW, have identical employment trajectories compared to their slightly younger, eligible peers when their establishment takes up STW. A 2012 reform doubling PBD from 6 to 12 months did not secure employment at treated firms 12 months after take-up, with minimal heterogeneity across worker characteristics. However, treated and control firms experienced substantial and persistent differences in their wage trajectories, with control firms without extensions lowering wages compared to treated firms. Across cells, larger wage effects corresponded with smaller employment effects, consistent with downward wage flexibility preventing layoffs and substituting for the employment protection effects of STW. Our research designs reveal that STW extensions in Germany did not significantly improve short- or long-term employment outcomes.

Suggested Citation

  • Christina Brinkmann & Simon Jäger & Moritz Kuhn & Farzad Saidi & Stefanie Wolter, 2024. "Short-Time Work Extensions," ECONtribute Discussion Papers Series 340, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:340
    as

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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_340_2024.pdf
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    References listed on IDEAS

    as
    1. Giulia Giupponi & Camille Landais & Alice Lapeyre, 2022. "Should We Insure Workers or Jobs during Recessions?," Journal of Economic Perspectives, American Economic Association, vol. 36(2), pages 29-54, Spring.
    2. Xavier Giroud & Holger M. Mueller, 2017. "Firm Leverage, Consumer Demand, and Employment Losses during the Great Recession," Working Papers 17-01, Center for Economic Studies, U.S. Census Bureau.
    3. Stüber, Heiko & Dauth, Wolfgang & Eppelsheimer, Johann, 2023. "A guide to preparing the sample of integrated labour market biographies (SIAB, version 7519 v1) for scientific analysis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 57, pages 1-7.
    4. Xavier Giroud & Holger M. Mueller, 2017. "Firm Leverage, Consumer Demand, and Employment Losses During the Great Recession," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(1), pages 271-316.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Stabilization policies; short-time work; wage rigidity; labor market institutions; intra-firm insurance;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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