Worksharing in the U.S. and Europe
10/27/2010 - 12/31/2012
During downturns organizations may adjust labor by reducing employment levels or by reducing the average hours worked by employees. The latter, often termed worksharing, is widely used when organizations expect a decline in demand to be temporary, as during a recession. In the United States, about a third of states have formal worksharing or short-time compensation programs, in which individuals whose hours have been reduced for economic reasons may receive pro-rated unemployment insurance benefits. Short-time compensation programs are well-established in many other industrialized countries, including Canada and Germany. These programs, which facilitate the use of hours reductions in lieu of layoffs, garnered much interest in this country and abroad during the Great Recession as a potential mechanism for mitigating job losses. In this project we exploit cross-state and cross-country variation in short-time compensation programs to study program effects on use of employment versus hours adjustment during the recent recession. We also examine whether there is any evidence in support of the hypothesis that short-time compensation programs increased employment levels (by mitigating job loss) in the recession. We consider institutional factors in the design and implementation of these programs in explaining the evidence—or lack of evidence—on program effects.
W.E. Upjohn Institute
UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS; Unemployment insurance