Short-Time Work: The German Answer to the Great Recession
German Institute for Economic Research (DIW Berlin) - Public Economics
Institute for the Study of Labor (IZA)
Klaus F. Zimmermann
Harvard University; German Institute for Economic Research (DIW Berlin); University of Bonn; Centre for Economic Policy Research (CEPR)
IZA Discussion Paper No. 5780
Short-time work was the "German answer" to the economic crisis. The number of short-time workers strongly increased in the recession and peaked at more than 1.5 million. Without the extensive use of short-time work, unemployment would have risen by approximately twice as much as it actually did. Short-time work has certainly contributed to the mild response of the German labor market to the crisis, but this is likely due to the country-specific context. Although the crisis has been overcome and employment is strongly expanding, modified regulations governing short-time work are still in place. This leads to undesired side effects.
Number of Pages in PDF File: 29
Keywords: labor market policy, partially unemployed workers, short-time work compensation, economic crisis
JEL Classification: J65, J68
Date posted: June 20, 2011
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