VoxEU & CEPR Coverage of the Covid-19 Global Pandemic

Worker representation, worker welfare, and firm performance

Jarkko Harju, Simon Jäger, Benjamin Schoefer, 19 June 2021

Many continental European countries give workers a formal right to voice via board-level or shop-floor elected representation, but evidence on the effects of these arrangements is scarce. This column examines reforms in Finland that introduced or expanded workers’ rights to voice institutions. Overall, the reforms had non-existent or small positive effects on turnover, job quality, firm survival, productivity, and capital intensity. It may be that Finnish worker voice institutions operate through information sharing and cooperation, which do not substantially improve worker outcomes but also do not harm firm performance.

The health externalities of downsizing

Alexander Ahammer, Dominik Grübl, Rudolf Winter-Ebmer, 18 June 2021

COVID-19 and the policies enacted to tackle virus transmission have led to a wave of unemployment in Europe and the US. This column uses data from Austria to examine the impact of downsizing by a firm on the health of people who remain at the firm. It finds a significant increase in drug prescriptions and hospitalisations following mass layoffs, driven primarily by mental and cardiovascular conditions. The authors argue that stress due to fear of job loss, rather than increased workloads, is the more likely explanation.

Corporate borrowing during crises

Juan Jose Cortina Lorente, Tatiana Didier, Sergio Schmukler, 18 June 2021

The recent expansion in global corporate debt has occurred not only in one but in several debt markets, notably bonds and syndicated loans. This column argues that firms obtain financing in several debt markets and this more diversified corporate debt composition might help them mitigate the impact of supply-side shocks. Contrary to common beliefs, debt financing did not necessarily halt during crises because firms from advanced and emerging economies shifted their capital raising activity between bonds and syndicated loans as well as between domestic and international markets. These market switches, conducted mostly by large firms, impacted the amount of debt borrowed, the borrowing maturity, and the debt currency denomination, within firms and at the aggregate level. Overall, debt markets need to be analysed jointly to obtain a more complete picture of who is borrowing at different points in time and how overall corporate debt is evolving.

State capacity and development clusters

Tim Besley, Chris Dann, Torsten Persson, 18 June 2021

The determinants of economic development have been debated for many years. However, some of these determinants have been hard to measure internationally. This column reviews evidence from 25 years of data to argue that countries form persistent ‘development clusters’ according to their levels of internal peace and state capacity.

Swedish school lunch reform, nutrition, and lifetime income

Petter Lundborg, Dan-Olof Rooth, 17 June 2021

School meal policies differ significantly between countries. Sweden and Finland serve healthy school lunches free of charge to all students, for instance, while children in neighbouring Norway and Denmark bring their own packed lunches from home. This column looks at a programme that introduced free nutritious school lunches for all pupils in Swedish primary schools between 1959 and 1969, and finds that children who participated during their entire primary school period went on to have higher lifetime incomes.

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