Page 11 - IDEA Kurzarbeit zahranicni zkusenost Covid19 duben2020 13

SHORT-TIME WORK AND RELATED MEASURES TO MITIGATE
THE CONSEQUENCES OF A (PARTIAL) ECONOMIC SHUTDOWN IDEA 2020
Table 1: Important Costs of a Sudden Economic Downturn and Policy Responses
Short-term Adjustment costs
Long-term Adjustment costs
Stifling adjustments to long-run changes can severely impact growth in the medium and long run and thereby far surpass the costs of any measures taken during crisis.
Dependence on tourism and economic conditions abroad are likely to make these costs important and likely to arrive quickly.
Policy Costs
Costs of Quick Implementation
Complicated rules lead to incomplete take- up, slow implementation and a large bureaucratic burden
Key - lessons
from economics
Destruction of (otherwise viable) jobs and enterprises is very costly
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Targeting is crucial, but information on who is needy and eligibility screening are costly and imperfect.
Self-targeting and ex post targeting can help to avoid ineffective programs and wasteful spending.
Abundant administrative data and good population registries can allow some quick algorithmic means-testing. The bureaucratic culture suggests large costs and inefficiencies of any other forms of means-testing.
Relevant Factors in the Czech Republic
- Severe costs of steep or
unexpected income/revenue reductions
- Dynamics of expectations in chaos can amplify negative effects
The quick and effective shutdown from an economy in full swing with little short-run support or recession policies in place likely makes adjustments difficult, but good economic conditions likely also delay hardship a bit.
A slow, strict and currently incapacitated bureaucracy makes anything but very simple programs a likely recipe for disaster.
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