Covid-19 in Central America: Firm resilience and policy responses on employment

Beatriz Calzada Olvera, Mario Gonzalez-Sauri, David-Alexander Harings Moya and Federico Louvin

Journal of Policy Modeling, 2022, vol. 44, issue 6, 1280-1295

Abstract: This paper examines how government support interacts with firm-level resilience capabilities in the reduction of layoffs among formal firms in Central America. Our analysis suggests that government support measures play a role in reducing the probability of layoffs among firms with only dynamic resilience capabilities (i.e., those that are developed after the pandemic onset). The effect of government support is not statistically different from the effect of static resilience capabilities alone (i.e., those that were present before the pandemic); thus, in firms with such capabilities, the effect of government support will be marginal. These results hold across sectors - exhibiting a marginally higher treatment effect in service sectors. Our results do not imply that Covid-19 supportive measures are to be disregarded, but instead raise the question of how government support policies could improve the allocation of support among firms in times of crises. Moreover, it underlines the necessity of policies that enhance resilience more broadly – a task that hints at structural issues and requires continuous government support in lieu of ad-hoc measures.

Keywords: Firm capabilities; Resilience; Innovation; Government support (search for similar items in EconPapers)
JEL-codes: C63 D01 L25 O30 O31 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:44:y:2022:i:6:p:1280-1295

DOI: 10.1016/j.jpolmod.2022.11.005

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