Welfare Effects of Short-Time Compensation
In: CESifo Working Paper Series No. 5063
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In: CESifo Working Paper Series No. 5063
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In: CESifo working paper series 5063
In: Social protection
We study welfare effects of public short-time compensation (STC) in a model in which firms respond to idiosyncratic profitability shocks by adjusting employment and hours per worker. Introducing STC substantially improves welfare by mitigating distortions caused by public unemployment insurance (UI), but only if firms have access to private insurance. Otherwise firms respond to low profitability by combining layoffs with long hours for remaining workers, rather than by taking up STC. Optimal STC is substantially less generous than UI even when firms have access to private insurance, and equally generous STC is worse than not offering STC at all.
Short Time Compensation [STC] was a key program in Germany to fight the crisis. However, STC is quite an old tool: in the past 100 years it has been used quite often and is very multifunctional. It stabilized employment in every kind of macroeconomic shock. After a brief look into the institutional and quantitative development of STC in Germany, this paper tries to answer the question whether STC prevents Schumpeterian creative destruction and structural change in economic downturns. With the help of a VAR-Model we can analyze interdependencies between the business cycle, STC and unemployment, finding evidence for a bridging function of STC. A closer look at the pro-cyclical average stoppage supports the thesis that most of the enterprises using STC are fundamentally economically healthy, that is, STC does not prevent structural change in downturns.
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In: Pergamon Press, work in Amerika Institute series
In: IZA Discussion Paper No. 12596
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In: Economic commentary, S. 1-6
ISSN: 0428-1276
We discuss the costs and benefits of short-time compensation (STC), an unemployment insurance program that allows workers with temporarily reduced hours to receive some unemployment insurance benefits. We describe the provisions for STC in the Middle Class Tax Relief and Job Creation Act of 2012 and the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act and report the utilization of STC before and after these acts. The number of states with STC programs has remained unchanged at 27 since the beginning of the pandemic, but STC utilization has recently risen to unprecedented levels, driven largely by increases in Michigan and Washington. However, these increases are small relative to increases in Germany's popular Kurzarbeit program, suggesting that the United States' STC program may still have scope for expansion.
In: Challenge: the magazine of economic affairs, Band 27, Heft 5, S. 56-57
ISSN: 1558-1489
In: IZA Discussion Paper No. 11746
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In: IZA Discussion Paper No. 4989
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In: Journal of political economy, Band 102, Heft 1, S. 76-102
ISSN: 1537-534X
In: Journal of political economy, Band 102, Heft 1, S. 76-102
ISSN: 0022-3808
Der Autor analysiert in einem Modell Zusammenhänge zwischen Kurzarbeitergeld, Kündigungsschutz und der Anpassung an schwankende Arbeitsnachfrage. Anhand empirischer Daten zeigt er im internationalen Vergleich, daß eine relativ großzügige Ausgestaltung des Kurzarbeitergelds - wie in vielen europäischen Ländern - das Arbeitsvolumen ebenso effektiv vermindern kann wie relativ liberale Kündigungsregelungen - wie in den USA. (IAB2)
In: Journal of political economy, Band 102, Heft 1, S. 76
ISSN: 0022-3808
In: Journal of political economy, Band 97, Heft 6, S. 1479-1496
ISSN: 1537-534X
In: Journal of political economy, Band 97, Heft 6, S. 1479
ISSN: 0022-3808