@TechReport{iza:izadps:dp14329,
            	author={Dengler, Thomas and Gehrke, Britta},
            	title={Short-Time Work and Precautionary Savings},
            	year={2021},
	month={Apr},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={14329},
            	url={https://www.iza.org/index.php/publications/dp14329},
	abstract={In the Covid-19 crisis, most OECD countries use short-time work schemes (subsidized working time reductions) to preserve employment relationships. This paper studies whether short-time work can save jobs through stabilizing aggregate demand in recessions. We build a New Keynesian model with incomplete asset markets and labor market frictions, featuring an endogenous firing as well as a short-time work decision. 
In recessions, short-time work reduces the unemployment risk of workers, which mitigates their precautionary savings motive and aggregate demand falls by less. Using a quantitative model analysis, we show that this channel can increase the stabilization potential of short-time work over the business cycle up to 55%, even more when monetary policy is constrained by the zero lower bound. Further, an increase of the short-time work replacement rate can be more effective compared to an increase of the unemployment benefit replacement rate.},
	keywords={short-time work;fiscal policy;incomplete asset markets;unemployment risk;matching frictions},
            }