When Short-Time Work Works

69 Pages Posted: 16 Jul 2018

See all articles by Pierre Cahuc

Pierre Cahuc

Ecole Polytechnique, Paris

Francis Kramarz

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Sandra Nevoux

CREST-ENSAE

Date Written: July 2018

Abstract

Short-time work programs were revived by the Great Recession. To understand their operating mechanisms, we first provide a model showing that short-time work may save jobs in firms hit by strong negative revenue shocks, but not in less severely-hit firms, where hours worked are reduced, without saving jobs. The cost of saving jobs is low because short-time work targets those at risk of being destroyed. Using extremely detailed data on the administration of the program covering the universe of French establishments, we devise a causal identification strategy based on the geography of the program that demonstrates that short-time work saved jobs in firms faced with large drops in their revenues during the Great Recession, in particular when highly levered, but only in these firms. The measured cost per saved job is shown to be very low relative to that of other employment policies.

Keywords: employment, Short-time work, unemployment

JEL Classification: E24, J22, J65

Suggested Citation

Cahuc, Pierre and Kramarz, Francis and Nevoux, Sandra, When Short-Time Work Works (July 2018). CEPR Discussion Paper No. DP13041, Available at SSRN: https://ssrn.com/abstract=3214559

Pierre Cahuc (Contact Author)

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

Francis Kramarz

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Sandra Nevoux

CREST-ENSAE ( email )

5 Rue Henry Le Chatelier
PALAISEAU, 91120
France
0033 (0)6 77 25 96 83 (Phone)

HOME PAGE: http://www.sandranevoux.com

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