The Labor Market Impacts of COVID-19

In high-, middle-, and low-income countries, the novel coronavirus (COVID-19) outbreak has sparked deep concerns about the effects of the pandemic shock on employment. These concerns are associated primarily with the impact of the shock on labor demand, but tend not to consider its effect on the potential labor force. As those susceptible to infection modify their labor supply decisions to minimize the risk of infection, exposed firms are simultaneously adjusting their labor demand to cope with supply-chain disruptions and the contraction in sales.

COVID-19 is thus rapidly changing labor market outcomes worldwide. Workers in countries where governments have not applied stringent non-pharmaceutical interventions like universal testing may decide to stay at home to reduce the probability of becoming infected as a result of work interactions. Demand-side employment effects also emerge as vulnerable firms with little cash-on-hand adjust their staffing temporarily or permanently in response to shocks to demand for their goods or services. The combination of these effects may foster reallocation of jobs across activities and firms. This seminar is bringing prominent scholars together to discuss these issues and present fresh evidence for both advanced and developing countries.