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Title: Inefficient Short-Time Work

Author(s): Pierre Cahuc and Sandra Nevoux

Publication Date: September 2017

Keyword(s): experience rating, Short-time work and Unemployment insurance

Programme Area(s): Labour Economics and Public Economics

Abstract: This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers' contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.

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Bibliographic Reference

Cahuc, P and Nevoux, S. 2017. 'Inefficient Short-Time Work'. London, Centre for Economic Policy Research. http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12269