On the Cleansing Effect of Recessions and Government Policy: Evidence from Covid-19

Pedro Dias Moreira and Nicholas Kozeniauskas
Authors registered in the RePEc Author Service: Cezar Santos

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: Recessions can have a cleansing effect by encouraging the reallocation of resources from lowproductivity firms towards higher-productivity ones. Whether this effect actually occurs is still debated. We contribute to answering this question by providing new evidence. Using a survey of firms matched with administrative data, we trace out the Covid-19 recession’s effects across the productivity distribution. Higher-productivity firms are found to have been more successful at maintaining employment, but there was not a rise in exit amongst lower-productivity firms. In line with the theory that support policies offset the cleansing effect of recessions, highproductivity firms are also found to have been less likely to take up government support.

JEL-codes: D22 E24 H81 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ent and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.bportugal.pt/sites/default/files/anexos/papers/wp202118.pdf

Related works:
Journal Article: On the cleansing effect of recessions and government policy: Evidence from Covid-19 (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w202118

Access Statistics for this paper

More papers in Working Papers from Banco de Portugal, Economics and Research Department Contact information at EDIRC.
Bibliographic data for series maintained by DEE-NTD ().