The effects of the job retention programme during the Covid pandemic on the Chilean firms and households

ABSTRACT

During the pandemic, several countries implemented job retention programmeswith the goal of preserving human capital and supporting a quick recovery. This work uses administrative records to show the impact of the job retention programme in Chile across firms of different industries and sizes. Using a calibrated model based on survey data of households and our administrative register of workers-firms, we then show that the Chilean Employment Protection Law increase aggregate consumption by 0.3% and helped to smooth household consumption during the period between March of 2020 and March of 2021.

KEYWORDS:

• Covid
• public finance
• job retention
• short-time work
• wage support

JEL CLASSIFICATION:

• D12
• H00
• J60

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Dingel and Neiman (2020) estimate that only 25.7% of the jobs in Chile can be performed remotely, much less than the rates above 40% in developed economies.