Performance of Firms Using COVID-19-related Support Policies: Ex-post evaluation

This study presents evidence on the performance of firms up to FY2023 that used three major support policies during the COVID-19 crisis: financial assistance, the employment assistance subsidy, and the subsidy to sustain business. The results show, first, that although productivity among firms that received support improved compared to levels immediately following the crisis, it generally remained low even after the pandemic subsided, with the quantitative magnitude differing across policy measures. Second, profit margins and mean wages of firms that received financial assistance or the subsidy to sustain business returned to their pre-COVID-19 levels, while wages of firms that used the employment assistance subsidy remained low as of FY2023. Third, by FY2023, employment levels declined among firms that used the support measures, compared to those that did not. Fourth, the probability of survival in FY2023 was lower for firms that used the support measures, suggesting that the effectiveness of these policies was limited. However, the support measures did not appear to hinder the market’s selection mechanism, whereby less productive firms exit from the market.

This is the English version of the Japanese Discussion Paper (25-J-021) with some additional information and changes.