Seminar Series “Macroeconomics and Labor Markets” on 22 October 2024
We are pleased to invite you to the seminar series on “Macroeconomics and Labor Markets“ organized by the Chair of Macroeconomics at the Friedrich-Alexander University Erlangen-Nuremberg, Prof. Merkl, the Chair of Global Governance and International Trade at the Friedrich-Alexander University Erlangen-Nuremberg, Prof. Moser, and the Competence Field Macroeconomics of the Institute for Employment Research (IAB). Researchers of both institutions, as well as national and international guests, present their current work at the intersection of labor- and macroeconomics.
The next seminar will be held on Tuesday, October 22, 12 noon to 1.30 (German time).
The seminar will take place in person at Wiso, Lange Gasse 20, room 4.154.
Online participation is possible via Zoom. I will send the login link along with a short reminder one day before the seminar.
Britta Gehrke (FU Berlin) will talk about “Short-Time Work and Precautionary Savings” (joint work with Thomas Dengler and Leopold Zessner-Spitzenberg).
Abstract
During the Covid-19 crisis, most OECD countries used short-time work (subsidized reductions in working hours) to preserve employment. This paper documents that short-time work affects the behavior of firms (supply) and households (demand). First, using household survey data from Germany, we show that the consumption risk of short-time work is lower than that of unemployment. Second, we construct a New Keynesian model with heterogeneous workers and firms, incomplete asset markets, and labor market frictions. Short-time work reduces workers’ precautionary savings and firms’ labor costs. However, it is costly in terms of productivity by tying workers to less productive firms. Using a quantitative model analysis, we show that both the demand and the firm channel stabilize the business cycle and dominate the productivity losses.