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The Employment and Windfall Effects of Short-Time Work: Evidence from Germany

Author

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  • Kagerl, Christian

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"I study the ramifications of the German short-time work (STW) scheme using novel administrative data on STW and drawing on evidence from establishment surveys that are linked to the administrative data. I show that, besides financial reasons, firms value and use STW because it allows them to hoard labor in a tight labor market. During the pandemic, I document a strong negative selection into STW based on measures of firm quality and productivity, a pattern not observed during the financial crisis. This selection pattern is explained by the differing types of crises and their impact on establishments. Adjusting for selection, I then investigate the employment effects of STW in the pandemic and find 3-4% higher employment levels for firms utilizing STW. This relationship, however, vanishes quickly after firms exit STW, a result driven by outflows among STW firms being initially lower, but being higher after the end of STW. Partly due to eased access rules, I additionally find that the policy’s windfall effects, or deadweight losses, are large: While back-of-the-envelope calculations suggest that up to half a million jobs were saved by STW in 2020, millions of jobs were supported in total, indicating an insufficient degree of targeting." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Kagerl, Christian, 2024. "The Employment and Windfall Effects of Short-Time Work: Evidence from Germany," IAB-Discussion Paper 202414, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:202414
    DOI: 10.48720/IAB.DP.2414
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    Keywords

    Bundesrepublik Deutschland ; Pandemie ; IAB-Datensatz BeCovid ; IAB-Open-Access-Publikation ; Auswirkungen ; Beschäftigungseffekte ; Beschäftigungsentwicklung ; Determinanten ; Finanzkrise ; IAB-Betriebs-Historik-Panel ; IAB-Betriebspanel ; Kurzarbeit ; Kurzarbeitergeld ; Mitnahmeeffekte ; Arbeitskräftehortung ; Umsatzentwicklung ; Unternehmen ; Arbeitsplatzsicherheit ; Arbeitsproduktivität ; 2009-2022;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • 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

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