Hope for the best and prepare for the worst. Do short-time work schemes help workers remain in the same firm?

Abstract

PurposeThis paper investigates whether short-time work (STW) schemes were successful in their objective of maintaining employment and keeping workers employed within the same firms after the onset of the financial and economic crisis in 2008.Design/methodology/approachSpanish longitudinal administrative data has been used, making it possible to identify short-time work (STW) participation not only of workers but also of employers and allowing to know the future labour market status of participants and non-participants. Accordingly, treatment and control groups are defined, and Propensity Score Matching models estimated. The dependent variable is measured as the probability that an individual remained employed with the same employer in the future (one, two and three years) after implementation of a STW arrangement.FindingsOur results suggest that treated individuals are about 5 percentage points less likely to remain working with the same employer one year later than similar workers, and this negative effect of participation increases over time. Thus, STW schemes would not have the assumed effect of preventing unemployment by keeping the participants employed relative to non-participants.Research limitations/implicationsAs our analysis is based on the comparison of the employment trajectories of participant and non-participant workers in firms that have used STW arrangements, our findings cannot be interpreted as the job saving effects of either macro or micro studies carried out previously.Practical implicationsThe analysis carried out in the paper is complementary to the country-level and firm-level approaches that have been used in the empirical literature.Originality/valueWe adopt a worker-level approach. This is novel since no previous study has focused attention on the impact of STW participation on the subsequent labour market status of workers.