OECD Social, Employment and Migration Working Papers
This series is designed to make available to a wider readership selected labour market, social policy and migration studies prepared for use within the OECD. Authorship is usually collective, but principal writers are named. The papers are generally available only in their original language - English or French - with a summary in the other.
- ISSN: 1815199X (online)
- https://doi.org/10.1787/1815199X
The Role of Short-Time Working Schemes During the Global Financial Crisis and Early Recovery
A Cross-Country Analysis
There has been a strong interest in short-time work (STW) schemes during the global financial crisis.
Using data for 23 OECD countries for the period 2004 Q1 to 2010 Q4, this paper analyses the quantitative
effects of STW programmes on labour market outcomes by exploiting the country and time variation in
STW take-up rates. The analysis takes account of differences in institutional settings across countries that
might affect the relationship between labour market outcomes and output and also addresses the
endogeneity of STW take-up with respect to labour market conditions. Moreover, special attention is given
to the dynamic aspects of the relationship between output and labour market outcomes. The results indicate
the STW raises hours flexibility by increasing the output elasticity of working time and helps to preserve
jobs in the context of a recession by making employment and unemployment less elastic with respect to
output. A key finding is that the timing of STW is crucial. While STW helped preserving a significant
number of jobs during the crisis, its continued use during the recovery may have slowed the job-content of
the recovery. By the end of 2010, the net effect of STW on employment was negligible or may even have
become negative. However, the gross impact of STW on the number of jobs saved per quarter remains
large and positive in the majority of countries.
Keywords: global financial crisis, work-sharing, partial unemployment benefits
JEL:
J68: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Mobility, Unemployment, and Vacancies: Public Policy;
J65: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Unemployment Insurance; Severance Pay; Plant Closings;
J23: Labor and Demographic Economics / Demand and Supply of Labor / Labor Demand
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