Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185206 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11746
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
The Short-Time Compensation (STC) program enables US firms to reduce work hours via pro-rated Unemployment Insurance (UI) benefits, rather than relying on layoffs as a cost-cutting tool. Despite the program's potential to preclude skill loss and rehiring/ retraining costs, firms' participation rates are still very low in response to economic downturns. Using firm-level UI administrative data, we show why by illustrating which type firms benefit from the program and which do not. Semiparametric estimation indicates STC reduces layoff rates for cyclically sensitive firms by about 15%, but has no effect for more cyclically stable firms.
Subjects: 
short-time compensation
layoffs
inverse probability weighting
heterogeneity
finite mixture model
JEL: 
C21
C38
J63
J65
Document Type: 
Working Paper

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