How the use of short-time work schemes has changed between the early-1990s and the late-2000s

What is it about?

This paper tries to disentangle whether differences in the incidence of short-time work (STW) schemes between two recessions (the early 1990s and the late 2000s) are associated with differences in the composition of employment (personal and job-related characteristics) or in returns (a differential effect of the same characteristics by period). Using individual data from the Spanish and Italian Labour Force Survey, we perform a multivariate detailed decomposition and find that the positive differential of participating in an STW arrangement in the second recession would have been even greater without the change in skills and production structure experienced since the previous one in both countries.

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Why is it important?

The contribution of this paper is twofold. Firstly, it tries to disentangle, adopting an applied labour economics perspective, whether differences in the incidence of STW schemes between two economic recessions (the ones that took place in the early 1990s and the late 2000s) are associated with either differences in personal and job-related characteristics or differential effects of the same characteristics. This allows us to shed some light on whether firms chose the same types of workers and jobs to participate in STW measures, whether they responded equally to similar changes in economic activity in both periods and what the confounding role of changes in jobs and workforce composition was. In this vein, we try to test empirically the above-mentioned predictions on the impact of the changes of employment composition on STW usage across economic downturns. Secondly, it provides a detailed picture of the attributes of employers and workers involved in STW schemes in both recessions in Italy and Spain, two countries where previous studies examining the evolution of the take-up rates and the characteristics of firms and workers who participate in these measures and their potential consequences are very limited.

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