Evaluating the effects of short and medium-term temporary work reduction schemes: the case of Spain’s ERTEs during the COVID-19 outbreak

Javier Garcia-Clemente, Nicola Rubino and Emilio Congregado

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents an average treatment effect analysis of the Spain’s furlough program during the onset of the COVID-19 pandemic, using propensity score matching techniques. Merging 2020 labor force quarterly microdata, we find that the probability to be re-employed after treatment was significantly higher among the treated (furlough granted group) than in the control group (comparable non-furloughed individuals who lost their job). These results seem to be robust across models, having tested a wide range of matching specifications. Furthermore, we also explore if the Spanish furlough scheme had an uniform impact across regions with different industrial structures, concluding that the furlough participation was positively related to the probability of re�employment across any region and economic activity. Nevertheless, a different time arrangement did affect the magnitude of the effect, suggesting that it may decrease with the furlough duration. This finding advises against long lasting schemes under persistent recessions, notwithstanding, short time work schemes still stand as useful strategies to face essentially transitory adverse shocks.

Keywords: Furlough; short-time work; ERTE; propensity score matching; Covid-19; Spain. (search for similar items in EconPapers)
JEL-codes: J08 J38 J65 J68 (search for similar items in EconPapers)
Date: 2022-08-12
New Economics Papers: this item is included in nep-eur and nep-lab
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