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Purpose Working time accounts (WTAs) allow firms to smooth hours worked over time. The purpose of this paper is to analyze whether this increase in flexibility has also affected how firms adjust employment in Germany over the business cycle.Design/methodology/approach This paper uses rich microeconomic panel data and fixed effects estimations to compare the employment adjustment of firms with and without WTAs.Findings The authors show that firms with WTAs show a similar separation and hiring behavior in response to revenue changes as firms without WTAs. One possible explanation is that firms without WTAs used short-time work (STW) to adjust hours worked instead. However, the authors find that firms with WTAs use STW more than firms without WTAs.Originality/value These findings call into question the popular hypothesis that WTAs were the key driver of the unusually small increase in German unemployment in the Great Recession. [ABSTRACT FROM AUTHOR]

This paper applies Verdoorn's and Okun's law to derive efficient estimates of the employment and unemployment threshold in the Unified Germany. The analysis is built on a disaggregated dataset of regional labour markets, where spatial dependencies are taken into account. Especially, a spatial SUR model is proposed utilising the eigenfunction decomposition approach suggested by Griffith (1996, 2000 ). The thresholds turn out to be unstable over time. However, minimum output growth sufficient for a rise in employment is below the level needed for a drop in the unemployment rate. If spatial effects are ignored, the thresholds seem to be markedly overrated. [ABSTRACT FROM AUTHOR]