Publikation: Monographie

Short-time work and precautionary savings

Grunddaten
Abstract
Autoren
Einrichtung

Grunddaten

Titel	Short-time work and precautionary savings
Erscheinungsjahr	2021
Verlag	IZA - Institute of Labor Economics
Verlagsort	Bonn, Germany
Serie	Discussion paper series ; no. 14329
Publikationsform	Elektronische Ressource
Publikationsart	Monographie
Sprache	Englisch
Letzte Änderung	21.04.2022 06:01:47
Bearbeitungsstatus	durch UB Rostock abschließend validiert
Dauerhafte URL	http://purl.uni-rostock.de/fodb/pub/67977
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Abstract

In the Covid-19 crisis, most OECD countries use short-time work schemes (subsidized working time reductions) to preserve employment relationships. This paper studies whether short-time work can save jobs through stabilizing aggregate demand in recessions. We build a New Keynesian model with incomplete asset markets and labor market frictions, featuring an endogenous firing as well as a short-time work decision. In recessions, short-time work reduces the unemployment risk of workers, which mitigates their precautionary savings motive and aggregate demand falls by less. Using a quantitative model analysis, we show that this channel can increase the stabilization potential of short-time work over the business cycle up to 55%, even more when monetary policy is constrained by the zero lower bound. Further, an increase of the short-time work replacement rate can be more effective compared to an increase of the unemployment benefit replacement rate.

Autoren

Dengler, Thomas

Gehrke, Britta

Einrichtung

WSF/IfVWL/Angewandte Makroökonomie