Short-time work in search and matching models: Evidence from Germany during the Covid-19 crisis

MPRA Paper from University Library of Munich, Germany

Abstract: This paper estimates the extent to which unemployment in Germany would have been increased during the Covid-19 recession without a short-time work (STW) labor-market policy which enables employers to reduce temporarily the working hours of full-time workers. A Bayesian estimation of a general equilibrium model with a STW policy, and a simulation of a counterfactual model without STW, show that the German unemployment rate would have been 4.2 percentage points higher without the policy. These results indicate that the STW participates in preventing excess job destruction during economic downturns, and in stabilizing unemployment fluctuations over business cycles.

Keywords: Search and matching; short-time work; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: E24 E32 J63 (search for similar items in EconPapers)
Date: 2023-11
New Economics Papers: this item is included in nep-dge, nep-eur and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:119238

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