DP16168 The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects
This paper investigates the adoption of short-time work by firms and their enrolled workers. We provide a model which shows that short-time work can save jobs in firms facing severe negative revenue shocks but not in less affected firms, where hours are reduced without saving jobs. Analyzing data from all French establishments during the 2008-2009 Great Recession, we find that short-time work saved jobs and increased hours worked in firms with significant negative shocks, enabling rapid post-recession recovery. We also identify substantial windfall effects, increasing the policy’s cost per job saved. Nonetheless, short-time work is more cost-efficient at saving jobs than wage subsidies, ultimately resulting in a negative net cost to public finances.
