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Reemployment premium effect of furlough programs: evaluating Spain's scheme during the COVID-19 crisis

Author

Listed:
  • Garcia-Clemente, J.

    (International University of Andalusia, Seville ; Department of Economics, Faculty of Business, University of Huelva)

  • Rubino, N.

    (University of Barcelona, Barcelona ; Department of Economics, Faculty of Business, University of Huelva)

  • Congregado, E.

    (Department of Economics, Faculty of Business, University of Huelva)

Abstract

"This paper presents an average treatment effect analysis of Spain's furlough program during the onset of the COVID-19 pandemic. Using 2020 labour force quarterly microdata, we construct a counterfactual made of comparable non-furloughed individuals who lost their jobs and apply propensity score matching based on their pretreatment characteristics. Our findings show that the probability of being re-employed in the next quarter significantly increased for the treated (furlough granted group). These results appear robust across models, after testing a wide range of matching specifications that reveal a reemployment probability premium of near 30 percentage points in the group of workers who had been furloughed for a single quarter. Nevertheless, a different time arrangement affected the magnitude of the effect, suggesting that it may decrease with the furlough duration. Thus, an analogous analysis for a longer (two quarter) scheme estimated a still positive but smaller effect, approximately 12 percentage points. Although this finding might alert against long lasting schemes under persistent recessions, this policy still stands as a useful strategy to face essentially transitory adverse shocks." (Author's abstract, IAB-Doku, © Springer-Verlag) ((en))

Suggested Citation

  • Garcia-Clemente, J. & Rubino, N. & Congregado, E., 2023. "Reemployment premium effect of furlough programs: evaluating Spain's scheme during the COVID-19 crisis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 57, pages 1-17.
    • Handle: RePEc:iab:iabjlr:v:57:p:art.17
    DOI: 10.1186/s12651-023-00343-w
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