Uncertainty and Layoffs in the Coronavirus Crisis

The coronavirus crisis has plunged the German economy into a recession that threatens many jobs. In fact, layoffs have already begun, as surveys by the ifo Institute show. But through which channels is the coronavirus shock hitting German companies? This article examines the specific significance of uncertainty and shows that insecure companies are particularly likely to reduce their workforces. This result suggests that economic policy measures to contain the crisis can be successful if they also specifically help reduce corporate uncertainty.