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Covid-19 in Central America: Firm resilience and policy responses on employment

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  • Calzada Olvera, Beatriz
  • Gonzalez-Sauri, Mario
  • Moya, David-Alexander Harings
  • Louvin, Federico

Abstract

This paper examines how government support interacts with firm-level resilience capabilities in the reduction of layoffs among formal firms in Central America. Our analysis suggests that government support measures play a role in reducing the probability of layoffs among firms with only dynamic resilience capabilities (i.e., those that are developed after the pandemic onset). The effect of government support is not statistically different from the effect of static resilience capabilities alone (i.e., those that were present before the pandemic); thus, in firms with such capabilities, the effect of government support will be marginal. These results hold across sectors - exhibiting a marginally higher treatment effect in service sectors. Our results do not imply that Covid-19 supportive measures are to be disregarded, but instead raise the question of how government support policies could improve the allocation of support among firms in times of crises. Moreover, it underlines the necessity of policies that enhance resilience more broadly – a task that hints at structural issues and requires continuous government support in lieu of ad-hoc measures.

Suggested Citation

  • Calzada Olvera, Beatriz & Gonzalez-Sauri, Mario & Moya, David-Alexander Harings & Louvin, Federico, 2022. "Covid-19 in Central America: Firm resilience and policy responses on employment," Journal of Policy Modeling, Elsevier, vol. 44(6), pages 1280-1295.
    • Handle: RePEc:eee:jpolmo:v:44:y:2022:i:6:p:1280-1295
    DOI: 10.1016/j.jpolmod.2022.11.005
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    Cited by:

    1. Gebka, Bartosz & Kanungo, Rama Prasad & Wildman, John, 2024. "The transition from COVID-19 infections to deaths: Do governance quality and corruption affect it?," Journal of Policy Modeling, Elsevier, vol. 46(2), pages 235-253.
    2. Surendran-Padmaja, Subash & Anwer, Md. Ejaz & Aditya, K.S., 2023. "Resilience of the Rural Employment Sector to Economic Shocks in India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 0(Number 1), March.
    3. TSURUTA Daisuke, 2024. "Determinants and Consequences of Bank Borrowings of Small Businesses: Is the COVID-19 crisis special?," Discussion papers 24007, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Firm capabilities; Resilience; Innovation; Government support;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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