Can work sharing sustain employment during economic downturn? Evidence from Brazil

•The first Brazilian work-sharing programme was successful in sustaining employment levels in a developing country context.•The effect of the program on employment increases over time and suggest that the programme was an effective tool to sustain employment levels.•The level of employment was sustained even after the number of hours worked returned to pre-programme levels.•The Brazilian work sharing program seems to prevent dismissals permanently rather than postponing them. This paper assesses the impact of the Employment Protection Programme (EPP) on employment outcomes in Brazil. The EPP was a work-sharing programme with a reduced work schedule that featured wage subsidies. It was created to preserve jobs during a recession that started in 2014. Using administrative data of the programme, the results of this study show that establishments that participate in the programme present higher employment levels than non-participant establishments during and after the programme. Furthermore, the effect of the EPP on employment increases over time. These findings suggest that the programme was an effective tool to sustain employment levels.