Christian Bredemeier, Falko Juessen, Roland Winkler, 28 June 2020

The COVID-19 crisis has disproportionately affected different occupations in the labour market. Workers in contact-intensive and personal-service oriented sectors bear the brunt of the COVID-19 recession, but blue-collar workers suffer heavy job losses as well. This column uses a multi-sector, multi-occupation macroeconomic model to study how different fiscal stimulus measures can boost aggregate demand and help the economy recover faster. It finds that a cut in taxes on labour income outperforms other stimulus plans in promoting job creation for those who lost their jobs in the COVID-19 downturn.

Stefano Federico, Fadi Hassan, Veronica Rappoport, 25 June 2020

In a period where the backlash against trade and globalisation is at historical high point, it is crucial to understand the frictions that prevent a full realisation of the gains from trade. This column takes evidence from Italy and contributes to the debate by identifying a novel channel: the endogenous funding constraint of banks whose loan portfolios are affected negatively by the liberalisation. There are spillovers between ‘losers’ and ‘winners’ from trade that operate through banks, which hinder the reallocation of resources towards firms that should actually expand after the liberalisation.

Sylvain Leduc, Zheng Liu, 14 June 2020

The COVID-19 pandemic has raised concerns about the future of work. The pandemic may become recurrent and necessitate repeated adoptions of social distancing measures, creating substantial uncertainty about worker productivity. This column presents a theoretical framework suggesting that such job uncertainty reduces aggregate demand, and dampens business investment in general. However, automation may provide one way for businesses to cope with the uncertainty about worker productivity. It appears that pandemic-induced job uncertainty could stimulate automation investment, despite declines in aggregate demand.

Helsinki Graduate School of Economics Situation Room, 21 May 2020

Effective management of the COVID-19 crisis requires real data in real time, often drawn from multiple sources. This column describes how researchers in Finland have created a remote-access ‘Situation Room’ that allows for real-time analysis of the Finnish economy, both for the government and for the wider public. The results from the study provide useful insights for policymakers in Finland and beyond.

R. Maria del Rio-Chanona, Penny Mealy, Anton Pichler, François Lafond, J. Doyne Farmer, 16 May 2020

Many researchers have studied the adverse impacts of the negative supply shock due to measures taken to combat the spread of COVID-19. This column provides estimates of occupation- and industry-specific effects of both the supply and the demand shock for the US. US GDP is predicted to decline by 22% compared to the pre-COVID-19 period, and 24% of US jobs are likely to be vulnerable. The adverse effects are further estimated to be strongest for low-wage workers who might face employment reductions of up to 42% while high-wage workers are estimated to experience a 7% decrease.

Olivier Coibion, Yuriy Gorodnichenko, Michael Weber, 12 May 2020

Business cycles are rarely a matter of life or death in advanced economies, but the COVID-19 crisis is forcing policymakers into painful trade-offs between saving lives and saving the economy. This column uses several waves of a customised survey to study the economic costs of US lockdowns in terms of spending, labour market outcomes, and macroeconomic expectations. It finds overall spending drops of more than 30%, unemployment expectations climbing more than 10%, inflation expectations falling, uncertainty rising, and plans to purchase large durables plummeting.

ChaeWon Baek, Peter B. McCrory, Todd Messer, Preston Mui, 30 April 2020

Stay-at-home orders have been imposed in many countries to flatten the COVID-19 pandemic curve, but it’s not clear how much economic disruption is caused directly by the orders and how much by the coronavirus. This column disentangles the two by comparing the implementation of stay-at-home policies across the US and high-frequency unemployment insurance claims. The direct effect of stay-at-home orders accounted for a significant but minority share of the overall rise in unemployment claims; unemployment would have risen even without such orders. So long as the underlying public health crisis persists, undoing stay-at-home orders will only bring limited economic relief.

Uri Alon, Eran Yashiv, 27 April 2020

Countries are facing stark choices between ending the lockdown to revive people’s lives and risking the ravages of the COVID-19 pandemic. This column proposes an exit strategy from lockdown based on a vulnerability in the coronavirus transmission mechanism, i.e. the latent period in which most infected people do not infect others. An optimal work/lockdown cycle based on this weak spot could minimise infection risks while greatly improving the painful trade-offs faced by policymakers.

Teresa Barbieri, Gaetano Basso, Sergio Scicchitano, 27 April 2020

Many countries are now designing exit strategies from the sectoral lockdowns put in place to contain the outbreak of Covid-19. This column provides new evidence from Italy on the degree of workplace risk of exposure to the virus. Unsurprisingly, the health sector is the most exposed to diseases and infections, while the services sector is the most risky in terms of physical proximity. These and other findings can help in deciding which activities to reopen first and where to reinforce security measures.

Petr Sedláček, Vincent Sterk, 25 April 2020

Startups are being hit hard by the COVID-19 pandemic and the lockdown. Introducing a ‘startup calculator’ that allows anyone to compute the aggregate employment losses under various economic scenarios, this column explores the effects of a decline in startup activity on aggregate employment. Job losses may be large and may last well beyond the pandemic itself.

Graziella Bertocchi, 23 April 2020

As countries gradually loosen lockdown restrictions, there will be increased urgency to determine which segments of the population are least susceptible to COVID-19 and should return to work first. This column re-examines the data on women in Italy and finds that working-age women are more susceptible to the disease than working-age men, likely due to women’s over-representation in jobs – namely, health and education – that expose them to a higher risk of contagion. Policies that count on women replacing men as lockdowns lift could aggravate the problem rather than solve it.

Zsoka Koczan, Alexander Plekhanov, 22 April 2020

While flexible labour markets normally facilitate economic adjustment during crises, recent Google search data suggest that the widespread Covid-19 lockdowns may impede this adjustment process. This column explores how labour market structures may determine how employment levels across middle-income countries are affected by the shock. The impending job and income losses are likely to be most severe where fewer people have permanent contracts, where many are self-employed, and where more people work for small firms and in retail. In the long term, these asymmetric impacts may further increase the demand for public-sector jobs.

Çağatay Bircan, Zsoka Koczan, Alexander Plekhanov, 21 April 2020

Small businesses, especially in retail and services sectors, which account for the vast majority of employment in the European region, have borne the brunt of the COVID-19 crisis. This column provides estimates of job displacement and surveys the policy measures taken by 38 emerging economies in Europe, Central Asia, and the Southern and Eastern Mediterranean in response to the economic disruptions. Given the predominance of small businesses in employment, job displacement rate in many of these economies is expected to reach 30%.  In the presence of constraints on fiscal measures and limited administrative capacity to disburse funding, second-best measures such as price control have been implemented widely.

Simona Bignami-Van Assche, Daniela Ghio, Ari Van Assche, 17 April 2020

It is well understood that COVID-19 severity varies with age. However, little consideration has been given to the differential trend of infections across age groups. By drawing from the Italian experience, this column shows how the effectiveness of strategies to ‘flatten the curve’ of COVID-19 infections crucially depends on workforce demographics. It suggests that restricting the age of essential workers may be useful to mitigate the work–security trade-off while keeping the economy going.

Olivier Coibion, Yuriy Gorodnichenko, Michael Weber, 14 April 2020

The Covid-19 crisis in the US and the policy responses have led to unprecedented numbers of initial claims for unemployment, but there are concerns that total job losses are being understated. This column uses a repeated large-scale survey of households in the Nielsen Homescan panel to show that job loss has been significantly greater than implied by new unemployment claims, with an estimated 20 million jobs lost by 8 April – far more than were lost over the entire Great Recession. Many of those who have lost their jobs are not actively looking to find new ones.

Pascal Michaillat, Emmanuel Saez, 12 April 2020

A lower unemployment rate puts more people into work, but it also makes it harder for businesses to fill their vacancies. This column explores the trade-off between unemployment and vacancies, as captured by the Beveridge curve – a measure which can then be used to estimate the socially efficient unemployment rate for the wider economy. The analysis suggests that the US unemployment rate of 3.5% just before the coronavirus crisis was just about efficient. 

Daniel Baksa, Zsuzsa Munkacsi, Carolin Nerlich, 12 April 2020

Ageing populations can transform the composition of an economy’s labour force and threaten the stability of its pension system. This column examines the possible effects of reversing the recent pension reforms adopted since the early 2000s. It appears that reversing past pension reforms would be very costly and would put a disproportionate burden on current and future young generations. Even without reversals, further reforms are needed to address the adverse macroeconomic and fiscal impact of population ageing.

Abigail Adams-Prassl, Teodora Boneva, Marta Golin, Christopher Rauh, 08 April 2020

The spread of COVID-19 has already had a large negative impact on labour supply and earnings of workers in many countries. In this column, the authors leverage newly collected data from the US and the UK to show that these negative consequences are particularly harsh for younger workers, those with unstable employment relationships and lower labour income. The evidence calls for a quick response from governments in the form of stimulus and labour income replacement packages, and a robust plan to ensure that the younger generation are not permanently disadvantaged.

Mikkel Hermansen, 15 March 2020

More than a fifth of American workers are required to hold an occupational licence to do their job, usually with the aim of protecting public health and safety. However, secular declines in job mobility, business dynamics, and productivity growth have raised concerns over the costs of licensing and its potential influence on these trends. Using novel administrative data with nearly complete employment coverage, this column presents suggestive evidence of sizeable effects of licensing on job mobility, especially on job-to-job flows across states. 

Josef Zweimüller, 28 February 2020

Can differences in culture and attitudes towards work explain differences in unemployment across time and space?


CEPR Policy Research