Short-Time Compensation and Establishment Exit: An Empirical Analysis with French Data

According to the French law, the short-time compensation (STC) program aims at avoiding redundancies during short-term downturns. Even if it does not shield establishments from redundancies (Calavrezo, Duhautois and Walkowiak, 2009a), STC can preserve an establishment's survival. This paper studies the relationship between STC and establishment exit over the period 2000-2005. We merge six data sets and we test the relationship between STC and establishment exit with propensity score matching techniques. Our results show that, on average, the year after establishments implement STC, they exit the market more intensely than establishments that do not use the program.