The Job Retention Scheme in Slovakia: Impact on Dismissals and Firm Survival in the COVID-19 Pandemic

ABSTRACTThis paper evaluates the impact of the Slovak job retention scheme introduced in 2020 on dismissals and survival of small firms during the COVID-19 pandemic. We exploit exogenous variation in epidemic intensity, measured as new COVID-19 cases within a district per month. We show that the sensitivity of dismissals to the intensifying epidemic among unsupported firms was low, i.e. these firms were relatively unaffected by the shock. In contrast, participation in the job retention scheme reduced the sensitivity of firm dismissals to the intensification of the epidemic, preserving endangered jobs. Supported firms benefited by roughly the same amount, regardless of their management quality.KEYWORDS: Employmentfirm failurejob retention schemeJEL CLASSIFICATION: G33 Bankruptcy • LiquidationH12 Crisis ManagementJ08 Labor Economics PoliciesJ63 Turnover • Vacancies • Layoffs Disclosure statementNo potential conflict of interest was reported by the author(s).Additional informationNotes on contributorsMatěj BělínMatěj Bělín is a PhD Candidate at The Center for Economic Research and Graduate Education – Economics Institute (CERGE-EI), joint workplace of the Charles University and Academy of Sciences of the Czech Republic. He works as an analyst at the Social Policy Institute, Ministry of Labour, Social Affairs and Family of the Slovak Republic.Marcela VeselkovaMarcela Veselkova is the head of the Department of Sectoral Strategies and Concepts, Social Policy Institute, Ministry of Labour, Social Affairs and Family of the Slovak Republic. She holds a PhD in Political Science from the Central European University.