In the Great Recession most OECD countries used short-time work (publicly subsidized working time reduction) to counteract a steep increase of unemployment. We show that
short-time work can actually save jobs. However, there is an important distinction to be made: While the automatic stabilization component of short-time work is a cost-efficient job saver, the discretionary component appears to be completely ineffective. In a case study for Germany, we
use the rich data available to combine micro- and macro-evidence with macroeconomicmodeling in order to identify, quantify and interpret these two components of short-time work.