No. 1544 - Short-time work, its replacement rate and labour mobility

Temi di discussione (Working papers)
by Gaetano Basso, Emanuele Ciani, Francesco Manaresi and Lorenzo Pesaresi
October 2026
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Short-time work schemes, such as Italy's Cassa Integrazione Guadagni (CIG), support workers' earnings and help firms preserve jobs during downturns, but they may also reduce mobility towards more productive and financially stronger firms. This paper assesses how the CIG replacement rate (the ratio of the benefit to the employee's wage) affects job-to-job mobility, using administrative data on workers and firms in Italy for 2008-19.

A 10-percentage-point increase in the replacement rate raises the probability that a worker remains with the same employer by about 3 per cent. The effect is stronger for workers with lower individual productivity. The additional fiscal cost associated with the resulting reduction in moves towards better-performing firms is relatively small.

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  1. 20 October 2026
    No. 1544 - Short-time work, its replacement rate and labour mobility
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