The Employment and Output Effects of Short-Time Work in Germany

42 Pages Posted: 21 Aug 2017

See all articles by Russell Cooper

Russell Cooper

University of Texas at Austin - Department of Economics; National Bureau of Economic Research (NBER)

Moritz Meyer

The World Bank

Immo Schott

University of Montreal - Department of Economics

Date Written: August 2017

Abstract

We study the employment and output effects of the short-time work (STW) policy in Germany between 2009 and 2010. This intervention facilitated reductions in hours worked per employee with the goal of preventing layoffs. Using confidential German micro-level data we estimate a search model with heterogeneous multi-worker firms as a basis for policy analysis. Our findings suggest that STW can prevent increases in unemployment during a recession. However, the policy leads to a decrease in the allocative efficiency of the labor market, resulting in significant output losses. These effects arise from a reduction in the vacancy filling rate resulting from the policy intervention.

Suggested Citation

Cooper, Russell W. and Meyer, Moritz and Schott, Immo, The Employment and Output Effects of Short-Time Work in Germany (August 2017). NBER Working Paper No. w23688. Available at SSRN: https://ssrn.com/abstract=3023088

Russell W. Cooper (Contact Author)

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Moritz Meyer

The World Bank ( email )

1818 H Street
Washington, DC 20433
United States

Immo Schott

University of Montreal - Department of Economics

C.P. 6128, succursale Centre-Ville
C-6028
Montreal, Quebec H3C 3J7 H2W1R9
Canada

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