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The impact of the Covid-19 job retention support on employment

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  • Meriküll, Jaanika
  • Paulus, Alari

Abstract

The paper studies the selection into the widespread job retention support that was provided during the Covid-19 pandemic and the employment effects of it, using firm-level administrative data for Estonia that cover the whole population of firms in 2019–2020. The endogeneity of the support is addressed by creating a control group from firms that were as severely hit as those that received the support and by using matching techniques. It is found that there was no selection of firms into the support by productivity once the sample is restricted to firms that experienced similar adverse conditions. The support had a positive effect on employment, as about one job in five that was supported by the scheme was saved and the unemployment rate would have been 2–4 percentage points higher in 2020 without the support.

Suggested Citation

  • Meriküll, Jaanika & Paulus, Alari, 2023. "The impact of the Covid-19 job retention support on employment," Economics Letters, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:ecolet:v:222:y:2023:i:c:s0165176522004372
    DOI: 10.1016/j.econlet.2022.110963
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    References listed on IDEAS

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    Cited by:

    1. Stefan Jestl & Branimir Jovanović & Ambre Maucorps & Leon Podkaminer & Maryna Tverdostup, 2024. "Monthly Report No. 3/2024," wiiw Monthly Reports 2024-03, The Vienna Institute for International Economic Studies, wiiw.
    2. Lalinsky, Tibor & Anyfantaki, Sofia & Benkovskis, Konstantins & Bergeaud, Antonin & Bun, Maurice & Bunel, Simon & Colciago, Andrea & De Mulder, Jan & Lopez, Beatriz Gonzalez & Jarvis, Valerie & Krasno, 2024. "The impact of the COVID-19 pandemic and policy support on productivity," Occasional Paper Series 341, European Central Bank.
    3. Meriküll, Jaanika & Paulus, Alari, 2024. "Were jobs saved at the cost of productivity in the COVID-19 crisis?," European Economic Review, Elsevier, vol. 161(C).
    4. Stefan Jestl & Maryna Tverdostup, 2024. "The Path Through: Early COVID-19 Job Loss and Labour Market Trajectories in Austria," wiiw Working Papers 246, The Vienna Institute for International Economic Studies, wiiw.
    5. Lalinsky, Tibor & Meriküll, Jaanika & Lopez-Garcia, Paloma, 2024. "Productivity-enhancing reallocation during the Covid-19 pandemic," Working Paper Series 2947, European Central Bank.

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    More about this item

    Keywords

    Covid-19; Job retention scheme; Employment;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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