KDI Journal of Economic Policy

Korea Development Institute (한국개발연구원)
권호 표지
DOI QR코드

DOI QR Code

Who's Hit Hardest? The Persistence of the Employment Shock by the COVID-19 Crisis

  • Received : 2021.04.09
  • Published : 2021.05.31
Download PDF
⟨ Previous Next ⟩

Abstract

The persistence of the employment shock by COVID-19 has various policy implications during the pandemic and beyond it. After evaluating the impact of the health crisis at the individual level, this study decomposes employment losses into persistent and transitory components using the observed timing of the three major outbreaks and subsequent lulls. The estimation results show that while face-to-face services were undoubtedly hit hard by the COVID-19 crisis, the sectoral shock was less persistent for temporary jobs and self-employment. Permanent jobs in the hard-hit sector showed increasingly large persistent losses through the recurring crises, indicating gradual changes in employer responses. The persistent job losses were concentrated on young and older workers in career transitions, whose losses are likely to have long-term effects. These results suggest that targeted measures to mitigate the persistent effects of the employment shock should take priority during the recovery process.

Keywords

References

  1. Albanesi, Stefania and Jiyeon Kim. 2021. "The Gendered Impact of the COVID-19 Recession on the US Labor Market," Working Paper 28505, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w28505).
  2. Alon, Titan, Matthias Doepke, Jane Olmstead-Rumsey, and Michele Tertilt. 2020. "This Time It's Different: The Role of Women's Employment in a Pandemic Recession," Working Paper 27660, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27660).
  3. Alstadsaeter, Annette, Bernt Bratsberg, Gaute Eielsen, Wojciech Kopczuk, Simen Markussen, Oddbjorn Raaum, and Knut Roed. 2020. "The First Weeks of the Coronavirus Crisis: Who Got Hit, When and Why? Evidence from Norway," Working Paper 27131, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27131).
  4. Amior, Michael and Alan Manning. 2018. "The Persistence of Local Joblessness," American Economic Review, 108(7): 1942-1970. https://doi.org/10.1257/aer.20160575
  5. Aum, Sangmin, Sang Yoon Tim Lee, and Yongseok Shin. 2021a. "Inequality of Fear and SelfQuarantine: Is There a Trade-Off between GDP and Public Health?" Journal of Public Economics, 194: 1043-1054.
  6. Aum, Sangmin, Sang Yoon Tim Lee, and Yongseok Shin. 2021b. "COVID-19 doesn't need lockdowns to destroy jobs: The effect of local outbreaks in Korea," Labour Economics, forthcoming.
  7. Barth, Erling, James Davis, Richard Freeman, and Sari Pekkala Kerr. 2017. "Weathering the Great Recession: Variation in Employment Responses, by Establishments and Countries," RSF: The Russell Sage Foundation Journal of the Social Sciences, 3(3): 50-69. https://doi.org/10.7758/rsf.2017.3.3.03
  8. Bartik, Alexander W, Marianne Bertrand, Feng Lin, Jesse Rothstein, and Matt Unrath. 2020. "Measuring the Labor Market at the Onset of the COVID-19 crisis," Working Paper 27613, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27613).
  9. Bui, Truc Thi Mai, Patrick Button, and Elyce G Picciotti. 2020. "Early Evidence on the Impact of Coronavirus Disease 2019 (COVID-19) and the Recession on Older Workers," Public Policy & Aging Report, 30(4): 154-159. https://doi.org/10.1093/ppar/praa029
  10. Cajner, Tomaz, Leland D Crane, Ryan A Decker, John Grigsby, Adrian Hamins-Puertolas, Erik Hurst, Christopher Kurz, and Ahu Yildirmaz. 2020. "The U.S. Labor Market during the Beginning of the Pandemic Recession," Working Paper 27159, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27159).
  11. Campello, Murillo, Gaurav Kankanhalli, and Pradeep Muthukrishnan. 2020. "Corporate Hiring Under COVID-19: Labor Market Concentration, Downskilling, and Income Inequality." Working Paper 27208, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27208).
  12. Chan, Sewin and Ann Huff Stevens. 2001. "Job Loss and Employment Patterns of Older Workers," Journal of Labor Economics, 19(2): 484-521. https://doi.org/10.1086/319568
  13. Cheng, Wei, Patrick Carlin, Joanna Carroll, Sumedha Gupta, Felipe Lozano Rojas, Laura Montenovo, Thuy D Nguyen, Ian M. Schmutte, Olga Scrivner, Kosali I. Simon, Coady Wing, and Bruce Weinberg. 2020. "Back to Business and (Re)employing Workers? Labor Market Activity During State COVID-19 Reopenings," Working Paper 27419, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27419).
  14. Chetty, Raj, John N Friedman, Nathaniel Hendren, Michael Stepner, and the Opportunity Insights Team. 2020. "The Economic Impacts of COVID-19: Evidence from a New Public Database Built Using Private Sector Data," Working Paper 27431, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27431).
  15. Costa Dias, Monica, Robert Joyce, Fabien Postel-Vinay, and Xiaowei Xu. 2020. "The Challenges for Labour Market Policy during the Covid-19 Pandemic," Fiscal Studies, 41(2): 371-382. https://doi.org/10.1111/1475-5890.12233
  16. Davis, Steven J. and Till von Wachter. 2011. "Recessions and the Costs of Job Loss," Brookings Papers on Economic Activity, Fall 2011: 1-72.
  17. Gallant, Jessica, Kory Kroft, Fabian Lange, and Matthew J Notowidigdo. 2020. "Temporary Unemployment and Labor Market Dynamics during the COVID-19 Recession," Working Paper 27924, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27924).
  18. Haltiwanger, John C, Henry R Hyatt, Lisa B Kahn, and Erika McEntarfer. 2018. "Cyclical Job Ladders by Firm Size and Firm Wage," American Economic Journal: Macroeconomics, 10(2): 52-85. https://doi.org/10.1257/mac.20150245
  19. Han, Joseph. 2018. "Long-Term Effects of Labour Market Entry Conditions: The Case of Korea," Global Economic Review, 47(4): 434-463. https://doi.org/10.1080/1226508x.2018.1512417
  20. Han, Joseph. 2020. "The Employment Situation of Youth and Policy Suggestions," KDI Feature Article, 2020. 5. 6.
  21. Jacobson, Louis S, Robert J LaLonde, and Daniel G Sullivan. 1993. "Earnings Losses of Displaced Workers," The American Economic Review, 83(4): 685-709.
  22. Jeong, Daehee and Jiwoon Kim. 2017. "Analysis on the Recent Employment Growth and Outlook for 2018," KDI Feature Article, 2017. 12. 6.
  23. Kahn, Lisa B. 2010. "The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy," Labour Economics, 17(2): 303-316. https://doi.org/10.1016/j.labeco.2009.09.002
  24. Kurmann, Andre, Etienne Lale, and Lien Ta. 2020. The Impact of COVID-19 on Small Business Employment and Hours: Real-Time Estimates with Homebase Data, ESG UQAM, Departement des sciences economiques, Ecole des sciences de la gestion, Universite du Quebec a Montreal.
  25. Lee, Jongkwan and Hee-Seung Yang. 2021. "Pandemic and Employment: Evidence from COVID-19 in South Korea," Mimeo.
  26. Mongey, Simon, Laura Pilossoph, and Alex Weinberg. 2020. "Which Workers Bear the Burden of Social Distancing Policies?" Working Paper 27085, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27085).
  27. Montenovo, Laura, Xuan Jiang, Felipe Lozano Rojas, Ian M Schmutte, Kosali I Simon, Bruce A Weinberg, and Coady Wing. 2020. "Determinants of Disparities in COVID-19 Job Losses," Working Paper 27132, Working Paper Series, National Bureau of Economic Research (https://doi.org/10.3386/w27132).
  28. Oreopoulos, Philip, Till Von Wachter, and Andrew Heisz. 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, 4(1): 1-29.
  29. Russell, Lauren and Chuxuan Sun. 2020. "The Effect of Mandatory Child Care Center Closures on Women's Labor Market Outcomes during the COVID-19 Pandemic," Covid Economics, 62(18): 124-154.
  30. Schwandt, Hannes and Till Von Wachter. 2019. "Unlucky Cohorts: Estimating the Long-Term Effects of Entering the Labor Market in a Recession in Large Cross-Sectional Data Sets," Journal of Labor Economics, 37(S1): S161-S198. https://doi.org/10.1086/701046
  31. Sevilla, Almudena and Sarah Smith. 2020. "Baby Steps: The Gender Division of Childcare during the Covid-19 Pandemic," Oxford Review of Economic Policy, 36(Supplement_1): S169-S186. https://doi.org/10.1093/oxrep/graa027
  32. Stevens, Ann Huff. 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, 15 (1, Part 1): 165-188. https://doi.org/10.1086/209851