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Abstract:

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Social insurance policies in turbulent times: Short-time work versus unemployment insurance
Giulia Giupponi, Camille Landais and Alice Lapeyre November 2021
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Tags: covid-19; employment; labour markets; welfare; recessions; unemployment

While the US aggressively extended generosity of unemployment insurance in the face of the Covid-19 pandemic, Europe heavily subsidised reductions in hours worked and temporary layoffs through short-time work or similar schemes. This column presents a framework for determining the relative welfare costs and benefits of the two labour market policies during economic downturns. In countries with already generous unemployment insurance and/or strong employment protection, like those in Europe, strong cyclical short-time work programmes can be an extremely valuable complement to unemployment insurance to respond to recessions.