Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/180490 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11472
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Short-time work is a labor market policy that subsidizes working time reductions among firms in financial difficulty to prevent layoffs. Many OECD countries have used this policy in the Great Recession. This paper shows that the effects of short-time work are strongly time dependent and non-linear over the business cycle. It may save up to 0.8 jobs per short-time worker in deep economic crises. The policy becomes more efficient as the recession deepens. In expansions, the effects are smaller and may turn negative. We disentangle discretionary short-time work from automatic stabilization in German data using smooth transition VARs.
Subjects: 
short-time work
fiscal policy
labor market
non-linearity
smooth transition VARs
business cycle
JEL: 
C32
E24
E32
E62
Document Type: 
Working Paper

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