The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects,

This paper investigates the adoption of short-time work by firms and their participating employees. We present a model showing that short-time work can preserve jobs in firms facing severe negative revenue shocks, but not in less affected firms, where hours are reduced without preventing layoffs. Using data from all French establishments during the 2008-2009 Great Recession, we find that short-time work helped save jobs and increased hours worked in firms hit by significant revenue losses, facilitating a faster post-recession recovery. We also identify substantial windfall effects, which raise the policy’s cost per job saved. Nonetheless, short-time work is likely more cost-effective at preserving employment than wage subsidies, potentially resulting in a net negative cost to public finances.