Governments use short-time work (STW) schemes to subsidize job preservation during crises. We study the take-up of STW and its effects on worker outcomes and firm behavior using German administrative data from 2009 to 2021. Establishments utilizing STW tend to have higher wages, be larger, and have falling employment even before STW take-up. More adverse selection occurred during the COVID-19 pandemic. Within firms, STW is targeted towards workers likely to stay even in the absence of STW. To study the effects of STW, we examine two dimensions of policy variation: STW eligibility and extensions of potential benefit duration (PBD). Workers above retirement age, ineligible for STW, have identical employment trajectories compared to their slightly younger, eligible peers when their establishment takes up STW. A 2012 reform doubling PBD from 6 to 12 months did not secure employment at treated firms 12 months after take-up, with minimal heterogeneity across worker characteristics. However, treated and control firms experienced substantial and persistent differences in their wage trajectories, with control firms without extensions lowering wages compared to treated firms. Across cells, larger wage effects corresponded with smaller employment effects, consistent with downward wage flexibility preventing layoffs and substituting for the employment protection effects of STW. Our research designs reveal that STW extensions in Germany did not significantly improve short- or long-term employment outcomes.
Authors
Christina Brinkmann, Simon Jäger, Moritz Kuhn, Farzad Saidi, Stefanie Wolter
- Acknowledgements & Disclosure
- Brinkmann, Kuhn, and Saidi gratefully acknowledge funding by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) under Germany's Excellence Strategy (EXC 2126/1 -- 390838866) and through CRC TR 224 (Projects A03 and C03). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33112
- Pages
- 103
- Published in
- United States of America
Table of Contents
- Introduction 3
- Short-Time Work in Germany: Institutional Context 7
- Data 9
- Take-Up and Selection into STW 11
- Effects of Individual Receipt at the Individual Level 14
- Conceptualizing the Absence of Employment Effects 16
- Model Setup 17
- Model Results 20
- Extending the Potential Benefit Duration of Short-Time Work 22
- The 2012 Reform: STW Extension 23
- Research Design: Regression Discontinuity Based on STW Start Date 24
- RD Design: Balancedness, Take-Up, and Complier Characterization 26
- (No) Employment Effects of Short-Time Work Extensions 27
- Wage Effects and the Role of Wage Flexibility 28
- Effect of STW Extensions on Wage Growth 28
- Interdependence of Employment and Wage Effects 29
- Heterogeneity by Local Labor Market Conditions, Works Council Presence, and Liquidity 30
- Conclusion 32
- Bibliography 34
- Figures 34
- Tables 51
- Data Appendix 63
- Data on Individual STW Receipt 63
- Details on Data Construction for the Dataset on PBD Extensions 64
- Matching BTR KUG and BHP 64
- Processing IEB 65
- Aggregation to the Firm Level 65
- Preparing Dafne 66
- Predicting the Existence of a Works Council 67
- Details on Data Construction for the Dataset on Individual STW Eligibility 67
- Predicting the Retention Probability based on Individual Characteristics 67
- Model Appendix 69
- Supplementary Figures 76
- Supplementary Tables 84
