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Nordic Economic Policy Review

Labour Market Consequences of the Economic Crisis

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The Nordic Economic Policy Review is published by the Nordic Council of Ministers and addresses policy issues in a way that is useful for informed non-specialists as well as for professional economists. All articles are commissioned from leading professional economists and are subject to peer review prior to publication. The Nordic Economic Policy Review is published twice a year. The journal is distributed free of charge to members of the Nordic economic associations. The easiest way of subscribing to the NEPR is therefore to become a member of one of these associations, i.e., Denmark: Nationaløkonomisk Forening Finland: Taloustieteellinen Yhdistys Norway: Samfunnsøkonomene Sweden: Nationalekonomiska Föreningen For institutional subscriptions, please contact [email protected] Content: Introduction - Lars Calmfors and Bertil Holmlund Youth unemployment in Europe and the United States: David N.F. Bell and David G. Blanchflower Comment by Oskar Nordström Skans Employment consequences of employment protection legislation - Per Skedinger Comment by Assar Lindbeck Business cycle contingent unemployment insurance - Torben M. Andersen and Michael Svarer Comment by Erik Höglin Is short-time work a good method to keep unemployment down? - Pierre Cahuc and Stéphane Carcillo Comment by Ann-Sofie Kolm What active labor market policy works in a recession? - Anders Forslund, Peter Fredriksson and Johan Vikström Comment by Clas Olsson Regular education as a tool of counter-cyclical employment policy - Christopher Pissarides Comment by Björn Öckert

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Is short-time work a good method to keep unemployment down?

Short-time work compensation aims at reducing lay-offs by allowing employers to temporarily reduce hours worked while compensating workers for the induced loss of income. These programs are now widespread in the OECD countries, notably following the 2008-09 crisis. This paper finds that short-time work programs used in the recent downturn had significant beneficial effects. This suggests that countries which do not have short-time compensation programs could benefit from their introduction. But short-time compensation programs can also induce inefficient reductions in working hours and reduce the prospects of outsiders if used too intensively. Thus, the design of short-time compensation programs should include an experience-rating component.

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