Arbeitspapier
Short-Time Work and Precautionary Savings
In the Covid-19 crisis, most OECD countries have used short-time work (subsidized working time reductions) to preserve employment relationships. This paper studies whether short-time work can save jobs through stabilizing aggregate demand in recessions. First, we show that the consumption risk of short-time work is considerably smaller compared to unemployment using household survey data from Germany. Second, we build a New Keynesian model with incomplete asset markets and labor market frictions featuring an endogenous firing and short-time work decision. In recessions, short-time work reduces the unemployment risk of workers, which mitigates their precautionary savings motive. Using a quantitative model analysis, we show that this channel increases the stabilization potential of short-time work over the business cycle.
- Sprache
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Englisch
- Erschienen in
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Series: CESifo Working Paper ; No. 9873
- Klassifikation
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Wirtschaft
Macroeconomics: Consumption; Saving; Wealth
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Business Fluctuations; Cycles
Monetary Policy
Fiscal Policy
Labor Turnover; Vacancies; Layoffs
- Thema
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short-time work
fiscal policy
incomplete asset markets
unemployment risk
matching frictions
- Ereignis
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Geistige Schöpfung
- (wer)
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Dengler, Thomas
Gehrke, Britta
- Ereignis
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Veröffentlichung
- (wer)
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Center for Economic Studies and ifo Institute (CESifo)
- (wo)
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Munich
- (wann)
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2022
- Handle
- Letzte Aktualisierung
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20.09.2024, 08:20 MESZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Dengler, Thomas
- Gehrke, Britta
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2022