The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects

85 Pages Posted: 14 Jul 2021

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

Banque de France

Date Written: May 2021

Abstract

To understand which firms take-up short-time work and which workers they enroll in this program, we provide a model which shows 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. Using detailed data on the administration of the program covering the universe of French establishments in the 2008-2009 Great Recession, we find that short-time work did indeed save jobs and increase hours of work in firms faced with large negative shocks. These firms have been able to recover rapidly in the aftermath of the Recession thanks to short-time work. We also provide evidence of large windfall effects which significantly increased the cost of the policy per job saved; yet we also find that short-time work remains more cost-efficient at saving jobs than wage subsidies.

JEL Classification: E24, J22, J65

Suggested Citation

Cahuc, Pierre and Kramarz, Francis and Nevoux, Sandra, The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects (May 2021). CEPR Discussion Paper No. DP16168, Available at SSRN: https://ssrn.com/abstract=3886589

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

Banque de France

Paris
France

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