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Working Paper
Optimal Short-Time Work Policy in Recessions
Short-time work (STW) is a subsidy program linked to a reduction in working hours that has been widely used across Europe and partly used in some US states to combat job losses in the Great Recession and the COVID-19 pandemic. Although typically used alongside an unemployment insurance (UI) system, the interaction between STW and UI remains conceptually unclear. To close this gap in the literature, I develop a search and matching model of the labor market with risk-averse workers, flexible hours choice, endogenous separations, and generalized Nash bargaining. Deriving closed-form expressions ...
Working Paper
Carrots or Sticks? Short-Time Work vs. Layoff Taxes
While unemployment insurance systems are widely used to insure workers against income losses after separations, it is well known that they can inefficiently increase separations in the labor market. There are two distinct policy instruments commonly used by governments that can counter this known problem: layoff taxes and short-time work schemes. This study provides a search-and-matching model to evaluate which of the two is the better policy tool. We show that if only a few firms are financially constrained, layoff taxes are better because they do not distort working hours in the economy. ...