Preserving Job Matches during the COVID-19 Pandemic: Firm-level Evidence on the Role of Government Aid

Morten Bennedsen, Birthe Larsen, Ian Schmutte, Daniela Scur

Research output: Contribution to journalJournal articleResearch


We analyze the impact of the COVID-19 pandemic and government policies on firms' aid take-up, layoff and furlough decisions using newly collected survey data for 10,642 small, medium and large Danish firms. This is the first representative sample of firms reporting the pandemic's impact on their revenue and labor choices, showing a steep decline in revenue and a strong reported effect of labor aid take-up on lower job separations. First, we document that relative to a normal year, a quarter more firms have experienced revenue declines exceeding 35 percent. Second, we characterize the firms that took up aid and the type of aid package they chose - labor-based aid, fixed cost support or fiscal-based tax delays. Third, we compare their actual layoff and furlough decisions with reported counterfactual decisions in the absence of aid.
Original languageEnglish
JournalCovid Economics
Issue number27
Pages (from-to)1-30
Number of pages30
Publication statusPublished - 9 Jun 2020

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