The Job Retention Scheme in Slovakia: Impact on Dismissals and Firm Survival in the COVID-19 Pandemic

This paper evaluates the impact of the Slovak job retention scheme introduced in 2020 on dismissals and survival of small firms during the COVID-19 pandemic. We exploit exogenous variation in epidemic intensity, measured as new COVID-19 cases within a district per month. We show that the sensitivity of dismissals to the intensifying epidemic among unsupported firms was low, i.e. these firms were relatively unaffected by the shock. In contrast, participation in the job retention scheme reduced the sensitivity of firm dismissals to the intensification of the epidemic, preserving endangered jobs. Supported firms benefited by roughly the same amount, regardless of their management quality.