The Value of Preserving Job Matches During a Crisis

Morten Bennedsen, Birthe Larsen, Ian Schmutte and Daniela Scur

No 19867, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: It is generally difficult to measure the importance of preserving worker-firm relationships, particularly for low-wage jobs that involve general skills. The COVID-19 pandemic led to the sudden and seemingly temporary disruption of millions of otherwise productive employment relationships around the world. Using novel administrative and survey data from Denmark, we study a policy where firms paid up to 25% of wages to furlough instead of firing workers. We find firms derive value from maintaining ties to low-wage and blue collar workers and that preserving those matches is beneficial to firms, suggesting policies that preserve job matches may help speed-up recovery.

Keywords: Crisis management; Employment subsidies; personnel management; match value (search for similar items in EconPapers)
JEL-codes: H12 H32 H5 J3 J63 M54 (search for similar items in EconPapers)
Date: 2025-01
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