Kozeniauskas, NicholasMoreira, PedroSantos, Cezar2022-05-302022-05-302022-050014-2921http://hdl.handle.net/10400.14/37765Recessions can have a cleansing effect by encouraging the reallocation of resources from low-productivity firms towards higher-productivity ones. Whether this effect actually occurs is still debated. We contribute to answering this question by providing new evidence. Using a survey of firms matched with administrative data, we trace out the Covid-19 recession's effects across the productivity distribution. Higher-productivity firms are found to have been more successful at maintaining employment, but there was not a rise in exit amongst lower-productivity firms. In line with the theory that support policies offset the cleansing effect of recessions, high-productivity firms are also found to have been less likely to take up government support.porCleansing effectCovid-19FirmsPoliciesProductivityjournal article10.1016/j.euroecorev.2022.10409785128316624000794037000004