Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272722 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16095
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper studies short-time work arrangements (ERTEs) when aggregate risk is partially sector-specific. In Spain, the Great Recession and the pandemic recession (aka the Great Contagion) can both be understood as being driven partially by large sector-specific shocks. However, the latter shows much less labor reallocation because ERTEs were available to firms. We show that ERTEs stabilize unemployment rates by allowing workers to remain with their employers in highly affected sectors. However, they crowd-out labor hoarding of employers, increase the volatility of the rate of people working and, consequently, of output, and slow-down worker reallocation away from the sectors badly hit by the recession.
Subjects: 
worker turnover
sector diversification
short-time work
Great Recession
COVID-19
JEL: 
J11
J18
J21
J64
Document Type: 
Working Paper

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