Short-Time Work: The German Answer to the Great Recession

29 Pages Posted: 20 Jun 2011  

Karl Brenke

German Institute for Economic Research (DIW Berlin) - Public Economics

Ulf Rinne

IZA Institute of Labor Economics

Klaus F. Zimmermann

Harvard University; German Institute for Economic Research (DIW Berlin); University of Bonn; Centre for Economic Policy Research (CEPR)

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Abstract

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.

Keywords: labor market policy, partially unemployed workers, short-time work compensation, economic crisis

JEL Classification: J65, J68

Suggested Citation

Brenke, Karl and Rinne, Ulf and Zimmermann, Klaus F., Short-Time Work: The German Answer to the Great Recession. IZA Discussion Paper No. 5780. Available at SSRN: https://ssrn.com/abstract=1867049

Karl Brenke (Contact Author)

German Institute for Economic Research (DIW Berlin) - Public Economics ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Ulf Rinne

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/profile?key=1844

Klaus F. Zimmermann

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

German Institute for Economic Research (DIW Berlin)

Mohrenstraße 58
Berlin, 10117
Germany

University of Bonn

Postfach 2220
Bonn, D-53012
Germany

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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