IDEAS home Printed from https://ideas.repec.org/p/eti/dpaper/19056.html
   My bibliography  Save this paper

The Consequences of Short-Time Compensation: Evidence from Japan

Author

Listed:
  • KATO Takao
  • KODAMA Naomi

Abstract

We apply the Propensity Score Matching (PSM) with difference-in-differences methodology to unique data on STC from Japan, a country known for its extensive use of STC, and find the first rigorous evidence on the positive consequence of STC for firm performance measured by ROA and profit margin. Consistent with the observed positive consequences of STC for firm profitability, we further find that STC leads to sales growth without raising labor costs. We then assess the validity of four possible explanations for the positive consequence of STC on firm performance. Compared to the conventional explanations (preserving firm-specific human capital and avoiding the negative morale effect of layoffs), our additional evidence lends more credence to a behavioral explanation--worksharing which STC promotes can introduce what the psychological literature calls "shared adversity" which facilitates supportive interactions among workers in the firm and strengthens commitment of workers to the firm, and thereby enhances goal alignment between workers and the firm as well as between coworkers, resulting in enhanced firm performance.

Suggested Citation

  • KATO Takao & KODAMA Naomi, 2019. "The Consequences of Short-Time Compensation: Evidence from Japan," Discussion papers 19056, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:19056
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/19e056.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Russell Cooper, 2017. "The Employment and Output Effects of Short-Time Work in Germany," 2017 Meeting Papers 613, Society for Economic Dynamics.
    2. Morikawa, Masayuki, 2019. "Innovation in the service sector and the role of patents and trade secrets: Evidence from Japanese firms," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 43-51.
    3. Pierre Cahuc, 2014. "Short-time work compensations and employment," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-11, May.
    4. Tito Boeri & Herbert Bruecker, 2011. "Short-time work benefits revisited: some lessons from the Great Recession [‘Reversed roles? Wage and employment effects of the current crisis’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 26(68), pages 697-765.
    5. Balleer, Almut & Gehrke, Britta & Lechthaler, Wolfgang & Merkl, Christian, 2016. "Does short-time work save jobs? A business cycle analysis," European Economic Review, Elsevier, vol. 84(C), pages 99-122.
    6. Krügel, Jan Philipp & Traub, Stefan, 2018. "Reciprocity and resistance to change: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 147(C), pages 95-114.
    7. Takao Kato, 2014. "High-Involvement Work Systems in Japan, the United States, and Korea: Evidence from Field Research," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: International Perspectives on Participation, volume 15, pages 95-119, Emerald Group Publishing Limited.
    8. Karl BRENKE & Ulf RINNE & Klaus F. ZIMMERMANN, 2013. "Short-time work: The German answer to the Great Recession," International Labour Review, International Labour Organization, vol. 152(2), pages 287-305, June.
    9. repec:hal:spmain:info:hdl:2441/6596a4s9af8lt872jnqvm5jg73 is not listed on IDEAS
    10. Masahiro Abe & Takeo Hoshi, 2004. "Corporate Finance and Human Resource Management," Discussion papers 04027, Research Institute of Economy, Trade and Industry (RIETI).
    11. Ryo Kambayashi & Takao Kato, 2017. "Long-Term Employment and Job Security over the Past 25 Years," ILR Review, Cornell University, ILR School, vol. 70(2), pages 359-394, March.
    12. Katharine G. Abraham & Susan N. Houseman, 2014. "Short-Time Compensation as a Tool to Mitigate Job Loss? Evidence on the U.S. Experience During the Recent Recession," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(4), pages 543-567, October.
    13. Masahiko Aoki, 2013. "Toward an Economic Model of the Japanese Firm," Chapters, in: Comparative Institutional Analysis, chapter 18, pages 315-341, Edward Elgar Publishing.
    14. repec:hal:wpspec:info:hdl:2441/6596a4s9af8lt872jnqvm5jg73 is not listed on IDEAS
    15. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2018. "When Short-Time Work Works," Working papers 692, Banque de France.
    16. MORIKAWA Masayuki, 2014. "Innovation in the Service Sector and the Role of Patents and Trade Secrets," Discussion papers 14030, Research Institute of Economy, Trade and Industry (RIETI).
    17. Fabio R Arico & Ulrike Stein, 2012. "Was Short-Time Work a Miracle Cure During the Great Recession? The Case of Germany and Italy," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(2), pages 275-297, June.
    18. Ulf Rinne & Klaus Zimmermann, 2012. "Another economic miracle? The German labor market and the Great Recession," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-21, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cahuc, Pierre, 2024. "The Micro and Macro Economics of Short-Time Work," IZA Discussion Papers 17111, Institute of Labor Economics (IZA).
    2. Garcia-Clemente, Javier & Rubino, Nicola & Congregado, Emilio, 2022. "Evaluating the effects of short and medium-term temporary work reduction schemes: the case of Spain’s ERTEs during the COVID-19 outbreak," MPRA Paper 114504, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marlon R. Tracey & Solomon W. Polachek, 2020. "Heterogeneous Layoff Effects of the US Short‐Time Compensation Program," LABOUR, CEIS, vol. 34(4), pages 399-426, December.
    2. Reamonn Lydon & Thomas Y. Mathä & Stephen Millard, 2019. "Short-time work in the Great Recession: firm-level evidence from 20 EU countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-29, December.
    3. Julio G. Fournier Gabela & Luis Sarmiento, 2020. "Kurzarbeit and Natural Disasters: How Effective Are Short-Time Working Allowances in Avoiding Unemployment?," Discussion Papers of DIW Berlin 1909, DIW Berlin, German Institute for Economic Research.
    4. Daniel Kopp & Michael Siegenthaler, 2021. "Short-Time Work and Unemployment in and after the Great Recession [Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium]," Journal of the European Economic Association, European Economic Association, vol. 19(4), pages 2283-2321.
    5. Sandra NEVOUX, 2019. "Short-time work is an efficient job-saving policy [L’activité partielle constitue une politique efficace de sauvegarde de l’emploi]," Bulletin de la Banque de France, Banque de France, issue 225.
    6. repec:hal:wpspec:info:hdl:2441/68ufmnnh3j9vmblf03huqt18qe is not listed on IDEAS
    7. Britta Gehrke & Brigitte Hochmuth, 2021. "Counteracting Unemployment in Crises: Non‐Linear Effects of Short‐Time Work Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 144-183, January.
    8. Nathan Vieira, 2022. "The role of the financial constraint in STW policy success during and after the Great Recession," French Stata Users' Group Meetings 2022 13, Stata Users Group.
    9. Oana CALAVREZO & Lewis HOUNKPEVI & Florence JOURNEAU & Marie-Hélène NGUYEN, 2020. "L’utilisation de l’activité partielle durant la crise de la Covid-19 : une analyse empirique entre mars et mai 2020," LEO Working Papers / DR LEO 2804, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    10. Cahuc, Pierre & Nevoux, Sandra, 2017. "Inefficient Short-Time Work," IZA Discussion Papers 11010, Institute of Labor Economics (IZA).
    11. repec:spo:wpecon:info:hdl:2441/68ufmnnh3j9vmblf03huqt18qe is not listed on IDEAS
    12. Dengler, Thomas & Gehrke, Britta, 2021. "Short-Time Work and Precautionary Savings," IZA Discussion Papers 14329, Institute of Labor Economics (IZA).
    13. van der Wielen, Wouter & Barrios, Salvador, 2021. "Economic sentiment during the COVID pandemic: Evidence from search behaviour in the EU," Journal of Economics and Business, Elsevier, vol. 115(C).
    14. Magnus Reif, 2020. "Macroeconomics, Nonlinearities, and the Business Cycle," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 87.
    15. repec:hal:wpspec:info:hdl:2441/2ju03cb3kc9a3986bsibii70hd is not listed on IDEAS
    16. repec:spo:wpmain:info:hdl:2441/4urlmja10p80kqireg3ejlnogi is not listed on IDEAS
    17. Alipour, Jean-Victor & Fadinger, Harald & Schymik, Jan, 2021. "My home is my castle – The benefits of working from home during a pandemic crisis," Journal of Public Economics, Elsevier, vol. 196(C).
    18. Samuel Muehlemann & Harald Pfeifer, 2016. "The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 193-218, April.
    19. Dennis Tamesberger & Simon Theurl, 2021. "Design and Take-Up of Austria's Coronavirus Short-Time Work Model," ICAE Working Papers 127, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    20. repec:hal:spmain:info:hdl:2441/6596a4s9af8lt872jnqvm5jg73 is not listed on IDEAS
    21. repec:spo:wpecon:info:hdl:2441/2ju03cb3kc9a3986bsibii70hd is not listed on IDEAS
    22. Michael Moritz & Bastian Stockinger & Merlind Trepesch, 2017. "Multinational Resilience or Dispensable Jobs? German FDI and Employment in the Czech Republic Around the Great Recession," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(3), pages 345-359.
    23. Tito Boeri & Pierre Cahuc, 2022. "Labor Market Insurance Policies in the XXI Century," SciencePo Working papers Main hal-03878719, HAL.
    24. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2021. "The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects," SciencePo Working papers Main hal-03881632, HAL.
    25. Holtemöller, Oliver & Brautzsch, Hans-Ulrich & Drechsel, Katja & Drygalla, Andrej & Giesen, Sebastian & Hennecke, Peter & Kiesel, Konstantin & Loose, Brigitte & Meier, Carsten-Patrick & Zeddies, Götz, 2015. "Ökonomische Wirksamkeit der Konjunktur stützenden finanzpolitischen Maßnahmen der Jahre 2008 und 2009. Forschungsvorhaben im Auftrag des Bundesministeriums der Finanzen," IWH Online 4/2015, Halle Institute for Economic Research (IWH).
    26. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2018. "When Short-Time Work Works," SciencePo Working papers hal-03393127, HAL.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:19056. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: TANIMOTO, Toko (email available below). General contact details of provider: https://edirc.repec.org/data/rietijp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.