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Did Job Retention Schemes Save Jobs during the Covid-19 Pandemic? Firm-level Evidence from Latvia

Author

Listed:
  • Konstantins Benkovskis

    (Latvijas Banka)

  • Olegs Tkacevs

    (Latvijas Banka)

  • Karlis Vilerts

    (Latvijas Banka)

Abstract

This paper studies the employment effect of the job retention scheme implemented during the Covid-19 pandemic. Using firm-level data from Latvia, we investigate whether a change in the number of employees in firms that received support from the job retention programme has been different from that of similar firms which did not receive such support, and whether these differences have disappeared over time. We find strong evidence that job retention scheme participants in Latvia were less likely to cut employment and that this effect persisted for several months after receiving support. Participation in the job retention scheme affected both the likelihood of a firm’s survival and the rate at which employees were laid off. Our results also suggest that the participation effect was not uniform across firms, with the effect being less pronounced in service sectors with a higher level of contact intensity and more pronounced in sectors with a higher proportion of highly skilled employees.

Suggested Citation

  • Konstantins Benkovskis & Olegs Tkacevs & Karlis Vilerts, 2023. "Did Job Retention Schemes Save Jobs during the Covid-19 Pandemic? Firm-level Evidence from Latvia," Working Papers 2023/03, Latvijas Banka.
    • Handle: RePEc:ltv:wpaper:202303
    as

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    File URL: https://datnes.latvijasbanka.lv/papers/WP_3_2023.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Job retention schemes; idle-time allowance; Covid-19; employment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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