Suggested CitationBennedsen, Morten, Birthe Larsen, Ian M. Schmutte and Daniela Scur. "The value of a job match: firm-level evidence on the role of government aid." July 2021.
Earlier version appeared in COVID Economics, Issue 27, 9 June 2020
Policies that preserve productive employment relationships are particularly important in recessions. The collapse of economic activity during the pandemic was unlike any modern recession. We document the result of a national policy response including publicly subsidized furloughs that allowed workers to keep their jobs through the recession. The policy allowed for low unemployment and for the labor market to stabilize relatively quickly. Such policies are expensive with hard-to-measure benefits. Using novel survey and administrative data from Denmark, we find the policy was effective at a net cost of US$15 and US$127 per furloughed day for part- and full-time workers respectively