The main objectives of this study are to take into account the effects of COVID-19 on labor market functioning, and to evaluate the effects of policies regarding working time reduction, in terms of both containing the spread of infection and economic activity. Accordingly, we describe a macroeconomic model wherein we test the effects of reducing working hours in the Keynesian unemployment framework, which comprises a fixed prices and wages regime, and a consumption demand that is dependent on salaries and autonomous demand components. Moreover, we also describe a neoclassical unemployment framework, wherein the labor market is only governed by dynamic demand forces. Theoretical results show that, according to the epidemiological phase, a reduction in working hours may be a good policy for containing the virus and improving employment in the Keynesian framework when established conditions are maintained. In the neoclassical framework, a work sharing policy will fail if some conditions do not occur, and it could cause an increase in the spread of the virus when a reduction of epidemic containment measures occurs. Employment will increase when the pandemic ends. A numerical simulation confirms that a reduction in working hours could reduce virus diffusion, but only under established, constrained parameters in both frameworks.

Employment Support and COVID-19: Is Working Time Reduction the Right Tool?

Aldieri, L.;Bruno, B.;Vinci, C. P.
2022-01-01

Abstract

The main objectives of this study are to take into account the effects of COVID-19 on labor market functioning, and to evaluate the effects of policies regarding working time reduction, in terms of both containing the spread of infection and economic activity. Accordingly, we describe a macroeconomic model wherein we test the effects of reducing working hours in the Keynesian unemployment framework, which comprises a fixed prices and wages regime, and a consumption demand that is dependent on salaries and autonomous demand components. Moreover, we also describe a neoclassical unemployment framework, wherein the labor market is only governed by dynamic demand forces. Theoretical results show that, according to the epidemiological phase, a reduction in working hours may be a good policy for containing the virus and improving employment in the Keynesian framework when established conditions are maintained. In the neoclassical framework, a work sharing policy will fail if some conditions do not occur, and it could cause an increase in the spread of the virus when a reduction of epidemic containment measures occurs. Employment will increase when the pandemic ends. A numerical simulation confirms that a reduction in working hours could reduce virus diffusion, but only under established, constrained parameters in both frameworks.
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11386/4797129
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 1
  • ???jsp.display-item.citation.isi??? 3
social impact