Premium
Weather‐related Employment Subsidies as a Remedy for Seasonal Unemployment? Evidence from Germany
Author(s) -
Arntz Melanie,
Wilke Ralf A.
Publication year - 2012
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/j.1467-9914.2012.00547.x
Subject(s) - subsidy , unemployment , economics , suspect , seasonality , german , business cycle , empirical evidence , demographic economics , variation (astronomy) , labour economics , economic growth , macroeconomics , geography , political science , philosophy , statistics , physics , mathematics , archaeology , epistemology , astrophysics , law , market economy
Many European countries try to reduce seasonal unemployment by subsidizing short‐time employment during the winter period. Despite such costly efforts, pronounced seasonal unemployment patterns continue to exist. This puts doubts on the effectiveness of such policy interventions. This paper provides a first empirical assessment of the effectiveness of different subsidy schemes by exploiting the institutional variation in a German subsidy scheme that applies to the construction sector and the variation in local weather and business cycle conditions across 20 years. The findings confirm that generous short‐time subsidies reduce individual lay‐off probabilities in the case of poor weather conditions. However, the link between weather conditions and seasonal lay‐offs is much less strong than expected, making planned capacity reductions the main suspect for causing seasonality in unemployment patterns.