The Effects of Training under the Employment Adjustment Subsidy during the COVID-19 Pandemic: Evidence from Japan

Yudai Higashi and Masaru Sasaki
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Yudai Higashi: Faculty of Economics, Kyoto Sangyo University and Research Institute for Economics & Business Administration, Kobe University, JAPAN
Masaru Sasaki: Graduate School of Economics, Osaka University, JAPAN and Institute of Labor Economics (IZA), GERMANY

No DP2026-11, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: In Japan, many establishments adversely affected by the COVID-19 pandemic have received an Employment Adjustment Subsidy (EAS) to maintain employment. Beyond subsidizing temporary leave allowances, the EAS also includes a scheme that subsidizes employee training provided by establishments. Using establishment-level administrative data, this study examines the characteristics of establishments providing EAS-supported training to their employees and evaluates its effects on the probability of establishment closure, employment flows, and business activity levels during the pandemic. The results indicate that establishments with workforce compositions and industry affiliations linked with higher expected returns to human capital investment are more likely to provide EAS-supported training. Furthermore, the EAS-supported training provided early during the pandemic reduced the probability of establishment closures. Although this training temporarily increased the hiring rate during the EAS receipt period, this effect did not persist once receipt ended. There is no evidence that EAS-supported training reduced job separation rates or improved subjective business activity levels. Overall, the effects of EAS-supported training appear limited.

Keywords: Employment adjustment subsidy; Training; Establishment closure; Employment flow; Business activity; COVID-19 Pandemic (search for similar items in EconPapers)
JEL-codes: H25 J24 J63 L25 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2026-03
New Economics Papers: this item is included in nep-lma and nep-sea
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