(IRES/LIDAM, UCLouvain)
will give a presentation on
Abstract
Short-time work (STW) policies subsidize hour reductions for workers in firms facing temporary shocks, serving as the primary policy instrument for employment support during downturns. However, like other social insurance programs, their effectiveness hinges critically on design. By subsidizing reduced working hours, STW inherently creates incentives for excessive use in the absence of financial disincentives—challenging the notion that firms primarily use STW to maintain employment relationships that are temporarily disrupted but profitable in the long run. We study two Belgian reforms that imposed STW taxes on firms exceeding a 110-day threshold of STW use per worker. Using rich administrative data and a donut regression discontinuity design in the firm tax schedule, we estimate the impact of these employer-borne STW taxes on firm behavior. We find that tax increases significantly reduce employment, particularly among liquidity-constrained firms, while modestly increasing firm-level profitability. Additionally, we show that firms pass these tax increases onto workers by dampening the variable component of pay.
(with Bart Cockx (UGent) & Jaco De Baquer (UGent))”.