Short-time Employment Aid During the Covid-19 Lockdown Short- and Long-run Effectiveness

Luca Salerno, Axel H. Börsch-Supan, Diana López-Falcón and Johannes Rausch

No 32760, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The COVID-19 pandemic led to significant economic disruptions, prompting many governments to implement short-time employment aid (STEA) to mitigate job losses and income reductions. This study examines the effectiveness of STEA in the short and long term in Europe among workers aged 50 and older, a part of the population that was especially threatened by the disease. Using data from the Survey of Health, Ageing and Retirement in Europe (SHARE), we analyze the impact of STEA on employment status, working hours, and income during and after the pandemic. STEA was widespread in Europe. Our findings indicate that the use of STEA was in general reasonably targeted and may have helped its recipients to avoid even worse economic losses during the pandemic, especially after a learning process from 2020 to 2021. However, STEA may have led to increased employment instability in the longer run. Specifically, recipients of STEA were more likely to experience unemployment or furloughs post-pandemic. These results highlight the importance of designing STEA policies that not only provide immediate economic relief but also support sustainable employment and economic resilience.

JEL-codes: H52 J20 (search for similar items in EconPapers)
Date: 2024-08
New Economics Papers: this item is included in nep-age, nep-hea and nep-lma
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