IDEAS home Printed from https://ideas.repec.org/a/eee/eecrev/v161y2024ics0014292123002465.html
   My bibliography  Save this article

Were jobs saved at the cost of productivity in the COVID-19 crisis?

Author

Listed:
  • Meriküll, Jaanika
  • Paulus, Alari

Abstract

Economic recessions can boost the productivity-enhancing reallocation of jobs, yet the COVID-19 crisis has provided limited and mixed evidence of that. The paper studies the link between productivity and reallocation and investigates the role of job retention schemes in it, using a rich administrative dataset for Estonia that covers the whole population of firms from 2004 to 2020. We find persistent evidence for the reallocation of jobs towards more productive sectors and firms. However, the within-sector reallocation was surprisingly unresponsive to productivity in the COVID-19 crisis, in sharp contrast to the experience in the previous major crisis, the Great Recession. We show that a generous job retention scheme supressed the acceleration of within-industry reallocation towards more productive firms, which had negative consequences for aggregate productivity during COVID-19. The negative effects on productivity were offset by the positive employment effect, but the net gains from the job retention support appear limited.

Suggested Citation

  • Meriküll, Jaanika & Paulus, Alari, 2024. "Were jobs saved at the cost of productivity in the COVID-19 crisis?," European Economic Review, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:eecrev:v:161:y:2024:i:c:s0014292123002465
    DOI: 10.1016/j.euroecorev.2023.104618
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0014292123002465
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.euroecorev.2023.104618?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meriküll, Jaanika & Paulus, Alari, 2023. "The impact of the Covid-19 job retention support on employment," Economics Letters, Elsevier, vol. 222(C).

    More about this item

    Keywords

    Job reallocation; Productivity; COVID-19; Cleansing effect; Job retention scheme;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eecrev:v:161:y:2024:i:c:s0014292123002465. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eer .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.