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Some surprising facts about working time accounts and the business cycle in Germany

Some surprising facts about working time accounts and the business cycle in Germany PurposeWorking time accounts (WTAs) allow firms to smooth hours worked over time. The purpose of this paper is to analyze whether this increase in flexibility has also affected how firms adjust employment in Germany over the business cycle.Design/methodology/approachThis paper uses rich microeconomic panel data and fixed effects estimations to compare the employment adjustment of firms with and without WTAs.FindingsThe authors show that firms with WTAs show a similar separation and hiring behavior in response to revenue changes as firms without WTAs. One possible explanation is that firms without WTAs used short-time work (STW) to adjust hours worked instead. However, the authors find that firms with WTAs use STW more than firms without WTAs.Originality/valueThese findings call into question the popular hypothesis that WTAs were the key driver of the unusually small increase in German unemployment in the Great Recession. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

Some surprising facts about working time accounts and the business cycle in Germany

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0143-7720
DOI
10.1108/IJM-05-2017-0100
Publisher site
See Article on Publisher Site

Abstract

PurposeWorking time accounts (WTAs) allow firms to smooth hours worked over time. The purpose of this paper is to analyze whether this increase in flexibility has also affected how firms adjust employment in Germany over the business cycle.Design/methodology/approachThis paper uses rich microeconomic panel data and fixed effects estimations to compare the employment adjustment of firms with and without WTAs.FindingsThe authors show that firms with WTAs show a similar separation and hiring behavior in response to revenue changes as firms without WTAs. One possible explanation is that firms without WTAs used short-time work (STW) to adjust hours worked instead. However, the authors find that firms with WTAs use STW more than firms without WTAs.Originality/valueThese findings call into question the popular hypothesis that WTAs were the key driver of the unusually small increase in German unemployment in the Great Recession.

Journal

International Journal of Manpower – Emerald Publishing

Published: Oct 2, 2017

References

  • Does short-time work save jobs? A business cycle analysis