Short‐Time Work and Employment Stability: Evidence from a Policy Change

Abstract

This paper investigates whether short‐time work (STW) programmes achieve their stated goal of being devices intended to preserve jobs and keep workers employed in times of crisis. Our identification strategy exploits a change in the financial incentives provided to employers and employees for the temporary suspension of work contracts or the reduction of working time. We use longitudinal administrative data and estimate difference‐in‐differences regressions and instrumental variable bivariate probit models with endogenous covariates, which try to take account of the potential endogeneity of participation in STW. Our results suggest that discretionary policy changes in the incentives of STW schemes can be effective in the short run but they lose their ability when the decline in demand and the lack of work are more permanent.

Temporary layoffs, short-time work and COVID-19: the case of a dual labour market

“…For instance, Arranz et al (2021) estimate a negative probability of remaining working with the same employer after participating in an STW scheme. Conversely, Balleer et al (2016) put the emphasis on the rule-based component of STW acting as an automatic stabilizer and Arranz et al (2018) adds that discretionary policy changes can be effective in the short run, but that they lose their ability when the decline in demand is more permanent. Boeri and Bruecker (2011) find positive but temporary effects as well and point to large deadweight effects.…”

Hope for the best and prepare for the worst. Do short-time work schemes help workers remain in the same firm?

“…The procedure implies a process of negotiation on various issues, including the number and types of job affected by the proposed measures, the details of these measures and the criteria used to designate the workers involved (for instance, workers' representatives and employers may negotiate priorities of permanence for specific groups, such as workers with family burdens or older workers). At the same time the firm has to notify the labour authority, providing the necessary information to justify the measures proposed (for more details, see Arranz et al, 2018).…”

“…3. In a companion paper (Arranz et al, 2018), we focus our attention on a reform on STW incentives, examining whether this change had an effect on the probability of remaining in employment, so we used treatment and control groups before and after the reform and estimated difference-indifferences regressions and instrumental variable bivariate probit models with endogenous covariates. Quite differently, the current paper focuses on the difference that participating in STW may have on the stability of employment, so treatment and control groups are used and Propensity Score Matching (PSM) models estimated.…”

La segmentación laboral durante la recuperación económica: empleo atípico y rotación

“…Son conocidas las estrategias de subcontratación ("outsourcing") o la existencia de empresas multiservicios como formas de segmentación laboral (Alós, 2008;Fernández, Ibañez & Martínez, 2016) De igual forma no todos los asalariados con un contrato indefinido a tiempo parcial son exclusivamente del segmento secundario, ya que pueden estar voluntariamente en condición de parcialidad. Por ejemplo, puede darse una situación de contratación a tiempo parcial como consecuencia de un esquema de reducción temporal de la jornada laboral como mecanismo de ajuste interno de las empresas ante una crisis económica (Arranz, García-Serrano & Hernanz, 2018).…”