The Impact of the COVID-19 Pandemic and Policy Support on Productivity

105 Pages Posted: 29 Feb 2024

See all articles by Tibor Lalinsky

Tibor Lalinsky

National Bank of Slovakia

Marianthi Anastasatou

Bank of Greece

Sofia Anyfantaki

Bank of Greece

Konstantins Benkovskis

Bank of Latvia; Stockholm School of Economics in Riga

Antonin Bergeaud

Banque de France

Maurice Bun

De Nederlandsche Bank

Simon Bunel

Banque de France

Andrea Colciago

European Central Bank (ECB)

Jan De Mulder

National Bank of Belgium

Davide Fantino

Bank of Italy

Beatriz Gonzalez Lopez

Banco de España

Jiri Havel

European Central Bank (ECB)

Valerie Jarvis

European Central Bank (ECB)

Dmitry Khametshin

Banco de España

Tetie Kolaiti

De Nederlandsche Bank

Olegs Krasnopjorovs

Latvijas Banka

Laura Lebastard

European Central Bank (ECB)

Paloma Lopez-Garcia

European Central Bank

Fernando Martins

Bank of Portugal - Research Department; University of Lisbon - School of Economics and Management; Universidade Lusíada, Lisboa

Philipp Meinen

Deutsche Bundesbank

Jaanika Meriküll

Bank of Estonia; University of Tartu

Miles Parker

European Central Bank (ECB)

Josip Raos

Hrvatska Narodna Banka

Roberta Serafini

European Central Bank (ECB)

Domagoj Šelebaj

Hrvatska Narodna Banka

Béla Szörfi

European Central Bank (ECB)

Milan Vaňko

Národná banka Slovenska

Juuso Vanhala

Bank of Finland

Matjaz Volk

Bank of Slovenia

Date Written: February, 2024

Abstract

This paper studies the short-term and long-term consequences of the COVID-19 pandemic for productivity in Europe. Aggregate and sectoral evidence is complemented by firm-level data-based findings obtained from a large micro-distributed exercise. Productivity trends during the COVID-19 pandemic differed from past trends. Labour productivity per hour worked temporarily increased, while productivity per employee declined across sectors given the widespread use of job retention schemes. The extensive margin of productivity growth was muted to some degree by the policy support granted to firms. Firm entries declined while firm exits increased much less than during previous crises. The pandemic had a significant impact on the intensive margin of productivity growth and led to a temporary drop in within-firm productivity per employee and increased reallocation. Job reallocation was productivity-enhancing but subdued compared to the Great Recession. As confirmed by a granular data analysis of the distribution of employment subsidies and loan guarantees and moratoria, job reallocation and also debt distribution and“zombie firm” prevalence were not significantly affected by the COVID-19 policy support. The pandemic and related lockdowns accelerated changes in consumer preferences and working habits with potential long-term effects. Generous government support muted the surge in unemployment and reduced permanent scarring effects.

Keywords: adjustment of firms, COVID-19, cross-country analysis, Europe, government support, labour productivity, micro-distributed exercise, productivity-enhancing reallocation

JEL Classification: D22, H25, J38, O47

Suggested Citation

Lalinsky, Tibor and Anastasatou, Marianthi and Anyfantaki, Sofia and Benkovskis, Konstantins and Bergeaud, Antonin and Bun, Maurice and Bunel, Simon and Colciago, Andrea and De Mulder, Jan and Fantino, Davide and Lopez, Beatriz Gonzalez and Havel, Jiri and Jarvis, Valerie and Khametshin, Dmitry and Kolaiti, Tetie and Krasnopjorovs, Olegs and Lebastard, Laura and Lopez-Garcia, Paloma and Martins, Fernando and Meinen, Philipp and Meriküll, Jaanika and Parker, Miles and Raos, Josip and Serafini, Roberta and Šelebaj, Domagoj and Szörfi, Béla and Vaňko, Milan and Vanhala, Juuso and Volk, Matjaz, The Impact of the COVID-19 Pandemic and Policy Support on Productivity (February, 2024). ECB Occasional Paper No. 2024/341, Available at SSRN: https://ssrn.com/abstract=4741443 or http://dx.doi.org/10.2139/ssrn.4741443

Tibor Lalinsky (Contact Author)

National Bank of Slovakia ( email )

Imricha Karvasa 1
813 25 Bratislava
Slovakia

Marianthi Anastasatou

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

Sofia Anyfantaki

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

Konstantins Benkovskis

Bank of Latvia ( email )

Riga
Latvia

Stockholm School of Economics in Riga ( email )

Strelnieku iela 4a
Riga, LV 1010
Latvia

Antonin Bergeaud

Banque de France ( email )

Paris
France

Maurice Bun

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Simon Bunel

Banque de France ( email )

Paris
France

Andrea Colciago

European Central Bank (ECB)

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Jan De Mulder

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Davide Fantino

Bank of Italy ( email )

Via Nazionale 91
Roma, 00184
Italy

Beatriz Gonzalez Lopez

Banco de España

Alcala 50
Madrid 28014
Spain

Jiri Havel

European Central Bank (ECB)

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Valerie Jarvis

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Dmitry Khametshin

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Tetie Kolaiti

De Nederlandsche Bank

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Olegs Krasnopjorovs

Latvijas Banka ( email )

Riga
Latvia

Laura Lebastard

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Paloma Lopez-Garcia

European Central Bank ( email )

Sonnemannstraße 20
Frankfurt am Main, 60314
Germany
+496913448162 (Phone)

Fernando Martins

Bank of Portugal - Research Department ( email )

Av. Almirante Reis 71, 6th
Lisbon 1150-012
Portugal

University of Lisbon - School of Economics and Management ( email )

Rua do Quelhas, n.º 6
Lisbon, 1200-781
Portugal

Universidade Lusíada, Lisboa ( email )

Rua da Junqueira, 188 - 198
Lisboa, 1349-001
Portugal

Philipp Meinen

Deutsche Bundesbank

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Jaanika Meriküll

Bank of Estonia ( email )

Estonia Building 13
15095 Tallinn
Estonia

University of Tartu ( email )

Ülikooli 18
Tartu 50090
Estonia

Miles Parker

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Josip Raos

Hrvatska Narodna Banka

Zagreb
Croatia

Roberta Serafini

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Domagoj Šelebaj

Hrvatska Narodna Banka

Zagreb
Croatia

Béla Szörfi

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Milan Vaňko

Národná banka Slovenska

Bratislava
Slovakia

Juuso Vanhala

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

Matjaz Volk

Bank of Slovenia ( email )

Slovenska cesta 35
Ljubljana, 1505
Slovenia

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