The effect of short-time work on MSME firm survival during the Covid-19 pandemic

Abstract The Covid-19 pandemic caused pressure on micro-, small and medium-sized firms. As a result, many OECD countries used Short-Time Work (STW) support programs to help firms survive the pandemic. This study investigates the effect of STW on firm survival in Sweden. The data consists of two sets: accounting data on Swedish limited liability companies and data on their applications for STW support. In a discrete survival analysis, the firms that received STW support were compared to other firms, which either did not apply or did apply but did not receive STW support. The findings suggest that for micro- and small-sized firms, the STW support did not improve the likelihood of firm survival. On the other hand, medium-sized firms had a higher likelihood of survival when they received STW support. Therefore, this research adds empirical support to the effectiveness of STW policies for medium-sized firms. The study serves as a basis for policymakers and business leaders to refine strategies to promote economic stability and safeguard enterprises’ survival.