Original Article
Short-Time Compensation as a Tool to Mitigate Job Loss? Evidence on the U.S. Experience During the Recent Recession†
†
The authors are grateful to Linda Richer for compiling current information on the provisions of short-time laws in the United States, Chris O'Leary and Steve Wandner for helpful discussions concerning these laws, Brian Dahlin for providing unpublished state-level employment and hours data, Scott Gibbons for sharing data on STC benefit activity by state, and Lillian Vesic-Petrovic for assisting with data analysis. All remaining errors are, of course, the authors' own.
Abstract
During the recent recession only seventeen states offered short-time compensation (STC)—prorated unemployment benefits for workers whose hours are reduced for economic reasons. Federal legislation passed in 2012 will encourage the expansion of STC. Exploiting cross-state variation in STC, we present new evidence indicating that jobs saved during the recession as a consequence of STC may have been significant in manufacturing, but that the overall scale of the STC program was generally too small to have substantially mitigated aggregate job losses in the seventeen states. Expansion of the program is necessary for STC to be an effective countercyclical tool in the future.
