Russell Cooper, Moritz Meyer, Immo Schot, (2017), “The employment and output effects of short-time work in Germany”, VoxEU, 28 October
A major factor behind the ‘German miracle’ – which saw GDP collapse by almost 7% during the Global Crisis but unemployment increase by less than 1% – was a ‘short-time work’ policy that incentivised firms to reduce workers’ hours rather than laying off workers. This column explores the effectiveness of the policy and the potentially negative effects on output and productivity. In the short term, short-time work prevented steeper falls in output and employment. However, it also affected the reallocation of labour between more and less productive firms, leading to medium-term productivity losses.
Relevant Posts
- Fuest, Clemens, (2017), «The Politics of Germany’s External Surplus», Project Syndicate, 17 July
- Cohen, Desmond, (2017), «Rethinking German Economic Policy», Social Europe, 31 May