SHORT-TIME WORK POLICIES DURING THE COVID-19 PANDEMIC

In this paper, we analyze the impact of short-time work programs on the French labor market during the COVID-19 pandemic. We develop a dynamic model with incomplete markets, search frictions, human capital, and aggregate and idiosyncratic productivity shocks. We calibrate our model and simulate what...

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Bibliographic Details
Published in:Annals of economics and statistics 2022-01 (146), p.123-172
Main Authors: Albertini, Julien, Fairise, Xavier, Poirier, Arthur, Terriau, Anthony
Format: Article
Language:English
Subjects:
Economics and Finance
Humanities and Social Sciences
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Summary:In this paper, we analyze the impact of short-time work programs on the French labor market during the COVID-19 pandemic. We develop a dynamic model with incomplete markets, search frictions, human capital, and aggregate and idiosyncratic productivity shocks. We calibrate our model and simulate what the labor market response to a lockdown shock would have been under various STW programs. We show that STW succeeded in stabilizing employment and consumption but generated substantial windfall effects characterized by an excessive reduction in hours worked.
ISSN:2115-4430
1968-3863
DOI:10.2307/48674141