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

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  • J. Garcia-Clemente

    (University of Huelva
    International University of Andalusia)

  • N. Rubino

    (University of Huelva
    University of Barcelona)

  • E. Congregado

    (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 nonfurloughed 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.

Suggested Citation

  • J. Garcia-Clemente & N. Rubino & E. Congregado, 2023. "Reemployment premium effect of furlough programs: evaluating Spain’s scheme during the COVID-19 crisis," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-15, December.
    • Handle: RePEc:spr:jlabrs:v:57:y:2023:i:1:d:10.1186_s12651-023-00343-w
    DOI: 10.1186/s12651-023-00343-w
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