The Effects of Training under the Employment Adjustment Subsidy during the COVID-19 Pandemic: Evidence from Japan

In Japan, many establishments adversely affected by the COVID-19 pandemic received an Employment Adjustment Subsidy (EAS) to maintain employment. Beyond subsidizing temporary leave allowances, the EAS also includes a scheme that subsidizes employee training provided by establishments. Using establishment-level administrative data, this study examines the characteristics of establishments providing EAS-supported training to their employees and the relationships between such training and three outcomes—establishment closure, job separation, and business activity—during the pandemic. The results indicate that establishments with workforce compositions and industry affiliations linked with higher expected returns to human capital investment were more likely to provide EAS-supported training. Among EAS recipient establishments, those providing EAS-supported training in the early stages of the pandemic exhibited a lower probability of closure than those that did not; however, this pattern was not observed for establishments that stopped receiving EAS later. Some estimates indicate lower job separation rates among establishments providing EAS-supported training. We find little evidence suggesting that EAS-supported training improved subjective business activity levels. Overall, although some results suggest favorable relationships of EAS-supported training with establishment closure and job separation, the benefits of such training appear limited.