Covid-19 pandemic, state aid and firm productivity
Tibor Lalinsky and
No 1/2022, Bank of Finland Research Discussion Papers from Bank of Finland
We study the consequences of the COVID-19 pandemic on productivity by matching firm performance outcomes with corresponding firm-level information on government support. Our cross-country evidence for five EU countries shows that the pandemic led to a significant short-term decline in productivity predominantly driven by the within-firm growth component. A thorough comparative analysis of the distribution of employment and overall direct subsidies, considering separately also relative firm-level support and the probability of being supported, reveals several common characteristics. In general, the pandemic support was distributed rather efficiently, i.e. towards "deserving" firms and only marginally towards "zombie" and non-viable firms. However, government subsidies appear to have had a limited effect on aggregate productivity developments.
Keywords: Covid-19; productivity; firm-level data; government support; employment subsidies; cross-country analysis (search for similar items in EconPapers)
JEL-codes: D22 H25 J38 L29 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eff and nep-ent
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2022_001
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