Template-type: ReDIF-Paper 1.0
Author-Name: Antonia Díaz
Author-Person: pda65
Author-Workplace-Name: Instituto Complutense de Análisis Económico (ICAE), Universidad Complutense de Madrid (Spain).
Author-Name: Juan J. Dolado
Author-Person: pdo103
Author-Email: dolado@eco.uc3m.es
Author-Workplace-Name: Universidad Carlos III de Madrid, Departamento de Economía.
Author-Name: Alvaro Jáñez
Author-Workplace-Name: Universidad Carlos III de Madrid, Departamento de Economía.
Author-Name: Félix Wellschmied
Author-Person: pwe474
Author-Workplace-Name: Universidad Carlos III de Madrid, Departamento de Economía.
Title: Labor reallocation effects of furlought schemes: evidence from two recessions in Spain
Abstract: We examine the impact of furlough schemes in scenarios where aggregate risk has a sector-specific component and 
	workers have sector-specific human capital. In particular, we investigate the distinct responses of the Spanish labor 
	market to the Great Recession and the Great Contagion as both downturns have been triggered by such shocks. However, the 
	COVID-19 episode involves much less job destruction than the previous recession, possibly due to firms’ widespread adoption of 
	furlough schemes (ERTEs) which had been seldom activated earlier. There is consensus that these policies help stabilize the 
	unemployment rate by keeping matches alive in those sectors hardest hit by a crisis. However, under their current design, we 
	argue both empirically and theoretically that ERTEs: (i) crowd out labor hoarding by employers in the absence of those schemes, 
	(ii) increase the volatility of effective working rates and output, and (iii) hinder worker reallocation, especially in short recessions.
Classification-JEL: J11, J18, J21, J64.
Keywords: Strategy-Proofness; Single-Peaked Preferences; Social Choice Correspondences.
Length: 43 pages 
Creation-Date: 2024
Number: 2024-01
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae2401.txt
File-URL: https://hdl.handle.net/20.500.14352/102261
File-Format: Application/html
Handle: RePEc:ucm:doicae:2401