## The Welfare Implications of Job Retention Schemes

_IMF Working Papers, January 30, 2026_

## Source details

**Canonical URL:** [The Welfare Implications of Job Retention Schemes](https://www.imf.org/en/publications/wp/issues/2026/01/30/the-welfare-implications-of-job-retention-schemes-573549)

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## Bibliographic details
- Authors: John C Bluedorn, Dr. Jorge Mondragon, Ippei Shibata, Marina Mendes Tavares
- Published: January 30, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229037884.001

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### Summary
- Examines welfare implications of job retention schemes in which governments subsidize employers to preserve jobs during downturns.
- Uses EU microdata from 2003 to 2018.
- Builds a search-and-matching model with occupational choice, calibrated to the United Kingdom during the global financial and sovereign debt crises.
- Simulations find a retention policy scheme aimed at reducing unemployment by nearly 1 percentage point would have been both welfare-enhancing and cost-effective.

### Empirical evidence (EU microdata, 2003 to 2018)
- Job retention schemes are associated with lower job separation rates.
- The reduction in job separations is especially pronounced among lower-productivity workers.

### Model and calibration
- Framework: search-and-matching model with occupational choice.
- Calibration target: United Kingdom during the global financial and sovereign debt crises.

### Simulation results and welfare effects
- Targeted policy: retention scheme aimed at reducing unemployment by nearly 1 percentage point.
- Average welfare increase: 0.06 percent in consumption-equivalent terms.
- Distributional outcome: low-income workers benefit more than twice as much as the median worker by avoiding costly job switches and unemployment spells.

### Key statistics and publication identifiers
- Pages: 56
- Volume: 2026
- Issue: 015
- Series: Working Paper No. 2026/015
- DOI: https://doi.org/10.5089/9798229037884.001
- ISBN: 9798229037884
- ISSN: 1018-5941

*IMF Working Paper — John C Bluedorn; Dr. Jorge Mondragon; Ippei Shibata; Marina Mendes Tavares; January 30, 2026.*

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_Source: https://www.imf.org/en/publications/wp/issues/2026/01/30/the-welfare-implications-of-job-retention-schemes-573549_