Effectiveness of Government Support for the Private Sector during the COVID-19 Crisis : Evidence from El Salvador and Georgia
This paper estimates the effectiveness of government support to the private sector during the COVID-19 pandemic in El Salvador and Georgia using firm-level data collected before and during the pandemic. The two countries are selected because eligib...
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World Bank, Washington, DC
2022
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| Online Access: | http://documents.worldbank.org/curated/en/772451647971587082/Effectiveness-of-Government-Support-for-the-Private-Sector-during-the-COVID-19-Crisis-Evidence-from-El-Salvador-and-Georgia http://hdl.handle.net/10986/37289 |
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okr-10986-372892022-04-22T15:19:21Z Effectiveness of Government Support for the Private Sector during the COVID-19 Crisis : Evidence from El Salvador and Georgia Karalashvili, Nona Tamkoc, M. Nazim COVID SUPPORT EFFECTIVENESS PANDEMIC COVID-19 COVID RELIEF ELIGIBILITY GOVERNMENT SUPPORT TO FIRMS PRIVATE SECTOR COVID RELIEF EFFECTIVENESS WAGE SUBSIDIES CASH TRANSFERS EXPORT VULNERABILITY RESILIENCE HIGH-FREQUENCY DATA SHOCK CORONAVIRUS This paper estimates the effectiveness of government support to the private sector during the COVID-19 pandemic in El Salvador and Georgia using firm-level data collected before and during the pandemic. The two countries are selected because eligibility criteria for support involved pre-pandemic features of firms, as opposed to more prevalent criteria directly linked to firms’ experiences during the pandemic and that greatly exacerbate concerns about selection bias in estimation. Four outcome variables are studied relating to firms’ workforce, hours of operations, and expectations. Matching and panel estimation techniques are used on full and restricted samples, with the latter aimed at reducing selection bias. Government support appears to have helped firms avoid a reduction in operations in El Salvador, mainly through cash transfers, which also helped in terms of permanent workers, with the latter effect counteracted by wage subsidies. Smaller firms in Georgia appear to have benefited more from government support, mostly through fiscal relief, which was partially counteracted by wage subsidies that benefited larger firms more. The finding that smaller firms have benefited more helps raise confidence in the analysis as strong negative selection bias is expected in this context. Manufacturers of textiles and garments in El Salvador and hotels and restaurants in Georgia appear to have benefited from government support, but the patterns in other sectors are mixed and country-specific, highlighting potential complexities of attempting to target sectors. 2022-04-12T15:40:53Z 2022-04-12T15:40:53Z 2022-03 Working Paper http://documents.worldbank.org/curated/en/772451647971587082/Effectiveness-of-Government-Support-for-the-Private-Sector-during-the-COVID-19-Crisis-Evidence-from-El-Salvador-and-Georgia http://hdl.handle.net/10986/37289 English Policy Research Working Paper;9975 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Policy Research Working Paper Publications & Research Europe and Central Asia Latin America & Caribbean |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
COVID SUPPORT EFFECTIVENESS PANDEMIC COVID-19 COVID RELIEF ELIGIBILITY GOVERNMENT SUPPORT TO FIRMS PRIVATE SECTOR COVID RELIEF EFFECTIVENESS WAGE SUBSIDIES CASH TRANSFERS EXPORT VULNERABILITY RESILIENCE HIGH-FREQUENCY DATA SHOCK CORONAVIRUS |
| spellingShingle |
COVID SUPPORT EFFECTIVENESS PANDEMIC COVID-19 COVID RELIEF ELIGIBILITY GOVERNMENT SUPPORT TO FIRMS PRIVATE SECTOR COVID RELIEF EFFECTIVENESS WAGE SUBSIDIES CASH TRANSFERS EXPORT VULNERABILITY RESILIENCE HIGH-FREQUENCY DATA SHOCK CORONAVIRUS Karalashvili, Nona Tamkoc, M. Nazim Effectiveness of Government Support for the Private Sector during the COVID-19 Crisis : Evidence from El Salvador and Georgia |
| geographic_facet |
Europe and Central Asia Latin America & Caribbean |
| relation |
Policy Research Working Paper;9975 |
| description |
This paper estimates the
effectiveness of government support to the private sector
during the COVID-19 pandemic in El Salvador and Georgia
using firm-level data collected before and during the
pandemic. The two countries are selected because eligibility
criteria for support involved pre-pandemic features of
firms, as opposed to more prevalent criteria directly linked
to firms’ experiences during the pandemic and that greatly
exacerbate concerns about selection bias in estimation. Four
outcome variables are studied relating to firms’ workforce,
hours of operations, and expectations. Matching and panel
estimation techniques are used on full and restricted
samples, with the latter aimed at reducing selection bias.
Government support appears to have helped firms avoid a
reduction in operations in El Salvador, mainly through cash
transfers, which also helped in terms of permanent workers,
with the latter effect counteracted by wage subsidies.
Smaller firms in Georgia appear to have benefited more from
government support, mostly through fiscal relief, which was
partially counteracted by wage subsidies that benefited
larger firms more. The finding that smaller firms have
benefited more helps raise confidence in the analysis as
strong negative selection bias is expected in this context.
Manufacturers of textiles and garments in El Salvador and
hotels and restaurants in Georgia appear to have benefited
from government support, but the patterns in other sectors
are mixed and country-specific, highlighting potential
complexities of attempting to target sectors. |
| format |
Working Paper |
| author |
Karalashvili, Nona Tamkoc, M. Nazim |
| author_facet |
Karalashvili, Nona Tamkoc, M. Nazim |
| author_sort |
Karalashvili, Nona |
| title |
Effectiveness of Government Support for the Private Sector during the COVID-19 Crisis : Evidence from El Salvador and Georgia |
| title_short |
Effectiveness of Government Support for the Private Sector during the COVID-19 Crisis : Evidence from El Salvador and Georgia |
| title_full |
Effectiveness of Government Support for the Private Sector during the COVID-19 Crisis : Evidence from El Salvador and Georgia |
| title_fullStr |
Effectiveness of Government Support for the Private Sector during the COVID-19 Crisis : Evidence from El Salvador and Georgia |
| title_full_unstemmed |
Effectiveness of Government Support for the Private Sector during the COVID-19 Crisis : Evidence from El Salvador and Georgia |
| title_sort |
effectiveness of government support for the private sector during the covid-19 crisis : evidence from el salvador and georgia |
| publisher |
World Bank, Washington, DC |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/772451647971587082/Effectiveness-of-Government-Support-for-the-Private-Sector-during-the-COVID-19-Crisis-Evidence-from-El-Salvador-and-Georgia http://hdl.handle.net/10986/37289 |
| _version_ |
1764486903483072512 |