Protecting Workers, Firms, and Worker-Firm Attachment During COVID-19: Economic Considerations for the Assessment of Policy Measures

Governments around the world provided various types of support to businesses and their employees affected by the by the COVID-19 pandemic, to preserve employer-employee links, organizational knowledge, and firm-specific human capital, and to facilitate the economic recovery. This note complements efforts dedicated to document jobs-related policy responses by providing an overview of some of the basic economic considerations for the design and assessment of these policy measures, with special attention to emerging economies. The authors outline a simple framework for policy assessment that accounts for the mechanisms that transmit COVID-19 shocks through the economy and the implications of the larger informal sector and fiscal constraints shared by many emerging economies. The authors then apply this framework to analyze an array of policies that have been deployed to prevent and address business failures and job losses in sectors directly or indirectly affected by the pandemic.