Abstract
It is generally difficult to measure the importance of preserving worker-firm relationships, particularly for low-wage jobs that involve general skills. The COVID-19 pandemic led to the sudden and seemingly temporary disruption of millions of otherwise productive employment relationships around the world. Using novel administrative and survey data from Denmark, we study a policy where firms paid up to 25% of wages to furlough instead of firing workers. We find that aid-taking firms furloughed about 24pp more workers, a large share of whom would have otherwise been laid off, and this had a positive impact on subsequent firm survival, employment growth and sales. Further, we find firms derive value from maintaining ties to low-wage and blue collar workers and that preserving those matches is beneficial to firms, suggesting policies that preserve job matches may help speed-up recovery.
Original language | English |
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Article number | 102406 |
Journal | Labour Economics |
Volume | 84 |
Number of pages | 41 |
ISSN | 0927-5371 |
DOIs | |
Publication status | Published - Oct 2023 |
Bibliographical note
Published online: 11 July 2023.Keywords
- Employment subsidies
- Crisis management