Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71077
Authors: 
Balleer, Almut
Gehrke, Britta
Lechthaler, Wolfgang
Merkl, Christian
Year of Publication: 
2013
Series/Report no.: 
Kiel Working Paper 1832
Abstract: 
This paper analyzes the effects of short-time work (i.e., government subsidized working time reductions) on unemployment and output fluctuations. The central question is whether the rule based component (i.e., the existence of the institution short-time work) and the discretionary component (i.e., rule changes) stabilize employment over the business cycle. In our baseline scenario the rule based component stabilizes unemployment fluctuations by 15% and output fluctuations by 7%. Given the small share of short-time work expenses in terms of GDP, the stabilization effects are large compared to other instruments such as the income tax system. By contrast, discretionary short-time work interventions do not have any statistically significant effect on unemployment. These effects are based on a structural VAR estimation which is identified using the output elasticity of short-time work estimated from German establishment paneldata. The model shows that non-effects of discretionary interventions may be due to their low persistence.
Subjects: 
short-time work
fiscal policy
business cycles
search-and-matching
SVAR
JEL: 
E24
E32
E62
J08
J63
Document Type: 
Working Paper

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