On the Option Effects of Short-Time Work Arrangements

Kuno Huisman, J.J.J. Thijssen

Research output: Working paperDiscussion paperOther research output

Abstract

We analyse the short term work (STW) regulations that several OECD countries introduced after the 2007 financial crisis. We view these measures as a collection of real options and study the dynamic effect of STW on the endogenous liquidation decision of the firm. While STW delays a firm’s liquidation, it is not necessarily welfare enhancing. Moreover, it turns out that firms use STW too long. We show (numerically) that providers of capital benefit more than employees from STW. Benefits for employees can even be negative. A typical Nordic policy performs better than a typical Anglo-Saxon policy for all stakeholders.
LanguageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages33
Volume2018-004
StatePublished - 8 Feb 2018

Publication series

NameCentER Discussion Paper
Volume2018-004

Fingerprint

Liquidation
Employees
Real options
Financial crisis
Dynamic effects
Stakeholders
Nordic
OECD countries

Keywords

  • temporary unemployment
  • real options
  • dynamic cost-benefit analysis

Cite this

Huisman, K., & Thijssen, J. J. J. (2018). On the Option Effects of Short-Time Work Arrangements. (CentER Discussion Paper; Vol. 2018-004). Tilburg: CentER, Center for Economic Research.
Huisman, Kuno ; Thijssen, J.J.J./ On the Option Effects of Short-Time Work Arrangements. Tilburg : CentER, Center for Economic Research, 2018. (CentER Discussion Paper).
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Huisman, K & Thijssen, JJJ 2018 'On the Option Effects of Short-Time Work Arrangements' CentER Discussion Paper, vol. 2018-004, CentER, Center for Economic Research, Tilburg.

On the Option Effects of Short-Time Work Arrangements. / Huisman, Kuno; Thijssen, J.J.J.

Tilburg : CentER, Center for Economic Research, 2018. (CentER Discussion Paper; Vol. 2018-004).

Research output: Working paperDiscussion paperOther research output

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Huisman K, Thijssen JJJ. On the Option Effects of Short-Time Work Arrangements. Tilburg: CentER, Center for Economic Research. 2018 Feb 8, (CentER Discussion Paper).