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Short-Time Work and Unemployment in and after the Great Recession
[Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium]

Author

Listed:
  • Daniel Kopp
  • Michael Siegenthaler
Abstract
We study whether the Swiss short-time work (STW) program reduced unemployment in and after the Great Recession using quarterly establishment-level panel data linking administrative data sources. We compare changes in layoffs into unemployment, employment, and establishment survival between establishments that applied successfully and establishments that applied unsuccessfully for STW at cantonal employment agencies. The unsuccessful establishments provide a valid counterfactual for the successful ones because cantonal approval practices are partly idiosyncratic. We find that STW increases establishment survival and prevents rather than postpones dismissals. The 7,857 establishments treated in 2009 would have dismissed 20,600 additional workers into unemployment (0.47% of the labor force) until 2012. Most workers would have been dismissed in the quarters immediately following the application, and more than a third would have become long-term unemployed. The savings on unemployment benefits may have compensated for the spending on STW benefits.

Suggested Citation

  • Daniel Kopp & Michael Siegenthaler, 2021. "Short-Time Work and Unemployment in and after the Great Recession [Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium]," Journal of the European Economic Association, European Economic Association, vol. 19(4), pages 2283-2321.
    • Handle: RePEc:oup:jeurec:v:19:y:2021:i:4:p:2283-2321.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvab003
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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