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The Now of Work Annotated Bibliography features summaries of recent reports examining the implications of COVID-19. It will be updated regularly as new reports become available.
New entries added on 2020-06-22 are marked with a 🚩 symbol.
Gentilini, U., Almenfi, M., & Orton, I. (2020, June 26). Social protection and jobs responses to COVID-19: A real-time review of country measures. Published online by Ugo Gentilini.
Ugo Gentilini and Mohamed Almenfi, both of the World Bank, and Ian Orton of the International Labour Organization have teamed up with colleagues to document the range of social protection measures either planned or implemented by governments across the globe to mitigate the consequences of COVID-19. Data sources for this review include government websites, newspapers, official government twitter accounts and official information provided directly by country-based experts. The authors intend to update and verify the information weekly on an ongoing basis, making this a “living paper.”
Chetty, R., Friedman, J. N., Hendren, N., & Stepner, M. (2020, June 17). How did COVID-19 and stabilization policies affect spending and employment? A new real-time economic tracker based on private sector data. Cambridge, MA: Mossavar-Rahmani Center for Business & Government, Harvard Kennedy School.
In this paper, the authors address the challenges faced by policymakers during the COVID-19 pandemic by building a freely accessible platform. The platform tracks economic activity at a granular level in real time using anonymized data from private US companies. Specifically, the report includes weekly statistics on consumer spending, business revenues, employment rates and other key indicators disaggregated by county, industry and income group. Self-isolation driven by health concerns caused a sharp reduction in consumption levels. However, state-ordered re-openings of the economy have had little impact on local employment. Paycheck Protection Program loans have also had little impact on consumption and employment for small businesses. The analysis suggests that it may be more helpful to mitigate economic hardship during a pandemic through social insurance.
OECD. (2020, June 12). COVID-19 and international trade: Issues and actions. OECD Policy Responses to Coronavirus (COVID-19). Paris: Organisation for Economic Co-operation and Development.
This report from the OECD recommends four actions that countries can take to ensure that international trade keeps flowing during COVID-19. First, raise confidence in trade and international markets by improving transparency about trade-related policy actions and intentions. Second, ensure that supply chains continue to flow, especially for essentials such as health supplies and food. Third, avoid unnecessary export restrictions and other trade barriers since they will make the situation worse. Finally, think beyond the immediate, even in the midst of a crisis such as this one.
Bennedsen, M., Larsen, B., Schmutte, I., & Scur, D. (2020, June 9). Preserving job matches during the COVID-19 pandemic: Firm-level evidence on the role of government aid. COVID Economics: Vetted and Real-Time Papers, 27, 1–30. London, UK: Centre for Economic Policy and Research.
This paper looks at the impact of the COVID-19 pandemic on firms taking up government aid. Using a sample of Danish firms, the authors found that the most common type of aid package included support for furloughed workers and delays in tax payments. In general, firms receiving aid report more temporary and fewer permanent layoffs compared to firms not taking up government aid. Furthermore, the type of aid received by firms affected their reactions. Firms that took labour aid reported lower permanent layoffs and more furloughs, while firms that took cost aid reported both lower permanent layoffs and lower furloughs.
Stanford, J. (2020, June 3). 10 ways the COVID-19 pandemic must change work for good. Vancouver, BC: Centre for Future Work/Ottawa, ON: Canadian Centre for Policy Alternatives.
This paper identifies ten changes that will allow society to rebuild after the pandemic: 1) guaranteeing proper health and safety practices and equipment in workplaces; 2) reconfiguring the relationships of workplaces; 3) providing adequate paid sick leave and other income security; 4) ensuring that work from home occurs in a fair, safe, sustainable manner; 5) limiting precarious employment practices and providing decent supports to workers in insecure work arrangements; 6) welcoming the inevitable increase in the quantity of jobs in the full range of public sector functions and services; 7) reducing reliance on “just-in-time” management, staffing and logistics strategies; 8) reconfiguring Canada’s approach to income security; 9) revaluing the work of those occupations proven to be essential to public welfare and safety during the pandemic; 10) ensuring adequate structures of voice, representation and bargaining power for workers.
McKinsey & Company. (2020, June 1). COVID-19: Briefing materials. Global health and crisis response. New York, NY: McKinsey & Company.
As many regions lift public health measures and restart their economies, uncertainties around COVID-19 case reduction might persist. Both the World Health Organization and the Centers for Disease Control and Prevention predict a possible COVID-19 resurgence in the fall. Since the development of a vaccine is still uncertain, McKinsey & Company advises companies and governments to consider shifting online and setting remote workplace norms for the next 18–24 months. It is crucial to adapt with speed and discipline during the pandemic, while monitoring and learning from the environment to overcome uncertainty faster and build capabilities for the “next normal.”
Cavallo, A. (2020, June). Inflation with COVID consumption baskets. NBER Working Paper 27352. Cambridge, MA: National Bureau of Economic Research.
Consumer expenditure patterns have been greatly disrupted by the lockdowns and social-distancing policies in many countries. In this article, the author attempts to demonstrate bias measurement in the Consumer Price Indices (CPIs) used to measure inflation. Using estimates obtained from US credit and debit card transactions, the author shows that the basket mostly consumed during the COVID-19 pandemic experienced more inflation than the official CPI. The difference is large and growing over time as consumers spend more on food and similar categories currently experiencing inflation, and less on transportation and related categories with significant deflation.
Galasso, V., Pons, V., Profeta, P., Becher, M., Brouard, S., & Foucault, M. (2020, June). Gender differences in COVID-19 related attitudes and behavior: Evidence from a panel survey in eight OECD countries. NBER Working Paper 27359. Cambridge, MA: National Bureau of Economic Research.
Using data from two waves of a survey conducted in March and April 2020 in eight OECD countries, the authors found that women are more likely to see COVID-19 as a very serious health problem. The gender differences in attitudes and behaviours were significant in all countries and remained robust after controlling for various sociodemographic, employment and behavioural factors. These results carry important public policy implications since the behavioural changes needed to prevent COVID-19 diffusion, such as reduced mobility or wearing masks, might be the “new normal.”
Holland, K. L. (2020, June). Canada’s food security during the COVID-19 pandemic. SPP Research Paper, 13(13). Calgary, AB: The Simpson Centre for Agricultural and Food Innovation and Public Education, The School of Public Policy, University of Calgary.
As the report explains, challenges caused by COVID-19 have highlighted vulnerabilities in the food supply chain. Since March, the demand side has seen panic-buying of goods and changes in consumption patterns. On the supply side, farmers are the most impacted group. First, reduced capacity at meat processing facilities generated bottlenecks that prevented livestock from reaching market, an income loss for farmers. Second, timing is critical in farming. Crops must be planted and cultivated at specific times of the year, of course, and cannot be harvested until the process is complete. Labour and supply shortages have also led to delays. Overall, this generates greater uncertainty for farmers and increases their financial risks. The report calls on policy makers to address the food insecurity of Canadians and the financial uncertainty of farmers in the long-term.
Lemieux, T., Milligan, K., Schirle, T., & Skuterud, M. (2020, June). Initial impacts of the COVID-19 pandemic on the Canadian labour market. Spring–Summer 2020, Working Paper 26. Waterloo, ON: Canadian Labour Economics Forum.
The COVID-19 pandemic has induced sharp declines in economic activity, unprecedented in recorded economic history. Data from the Labour Force Survey show a 32% drop in aggregate weekly hours worked between February and April 2020 for workers aged 20–64, as well as a 15% drop in employment for the same group. In addition, almost half of all job losses occurred to workers whose earnings lay in the bottom quartile of wage distribution. Workers in public-face occupations such as food services and accommodation, workers who are younger, and workers paid hourly bore a disproportionate share of job losses. From a policy perspective, regulations about safe work — especially for those with the least bargaining power — policies that address childcare needs, and finding the right balance between income support and economic incentives to work are essential to an efficient, successful recovery.
Lin, P. Z., & Meissner, C. M. (2020, June). A note on long-run persistence of public health outcomes in pandemics. NBER Working Paper 27119. Cambridge, MA: National Bureau of Economic Research.
Using data from U.S. cities, along with a sample of other countries, the authors find a negative correlation between the health outcomes (such as mortality rates) for the COVID-19 and Spanish flu pandemics. Places relatively unaffected by the Spanish flu in 1918 were more likely affected during the first few months of the COVID-19 pandemic and still have higher mortality months later. The authors also suggest that the political climate can affect health outcomes, specifically through preparedness and access to resources. As a lesson from history, places most affected by SARS in 2002, such as East Asian nations, learned the importance of pandemic preparedness, which appears to have positively influenced their preparedness for COVID-19.
Papanikolaou, D., & Schmidt, L. D. W. (2020, June). Working remotely and the supply-side impact of COVID-19. NBER Working Paper 27330. Cambridge, MA: National Bureau of Economic Research.
Using data from the American Time Use Survey (ATUS), the authors constructed a “COVID-19 work exposure” index to capture supply-side disruptions associated with the pandemic across sectors, firms and workers. This index, measuring differences in the capacity to work remotely, reveals that exposure varies significantly by sector. Exposure is low for software publishers, since most production can be done remotely, but very high for meat production where employees cannot work remotely. In sectors with higher exposure indicators (less ability to work remotely), greater declines in employment, more reductions in expected revenue growth, and worse stock market performance were measured. Those most affected were lower-paid female workers with young children.
Turcotte, M., & Hango, D. (2020, May 28). Impact of economic consequences of COVID-19 on Canadians’ social concerns. StatCan COVID-19: Data to Insights for a Better Canada. Catalogue no. 45280001. Ottawa, ON: Statistics Canada, Government of Canada.
Using Statistics Canada’s newly developed online Canadian Perspective Survey, the authors examined how personal financial concerns can impact matters related to social cohesion. Factors considered include family stress from confinement, violence in the home, maintaining social ties, the ability to co-operate and support one another, and the risk of civil disorder. Seventeen percent of Canadians aged 25–64 reported that COVID-19 will have a major impact on their ability to meet their essential needs and financial obligations (e.g., mortgages and utilities); 25% reported that they would likely lose their main job or primary source of income. These groups were also more likely to be concerned about the social impacts of the pandemic. Immigrants and those with low levels of education reported greater social concerns compared to Canadian-born residents and those with more education.
ILO. (2020, May 27). ILO Monitor: COVID-19 and the world of work, 4th ed. Geneva, Switzerland: International Labour Organization.
This forth edition of the ILO Monitor updates estimates and analysis on the effects of COVID-19 on the world of work. Key messages include that 94% of the world’s workers are living in countries with some sort of workplace closures in place. Estimates suggest that testing for and tracing of infections can help to reduce working hour losses (which declined by 10.7%) by as much as 50%. They also highlight that young people are facing multiple shocks from the COVID‑19 pandemic, which could lead to the emergence of a “lockdown generation.” The ILO calls for urgent, large-scale policy responses to prevent long-lasting damage to young people.
Statistics Canada. (2020, May 27). Canadians’ mental health during the COVID-19 pandemic. The Daily. Ottawa, ON: Government of Canada.
Between April 24 and May 1 2020, Statistics Canada collected data via an online questionnaire from approximately 46,000 Canadians on the impact of COVID-19 on mental health. Almost one-quarter of participants indicated fair or poor mental health. Over half reported that their mental health has worsened since physical distancing restrictions were implemented. Those financially affected by COVID-19 are more prone to anxiety symptoms due to difficulties in meeting financial obligations. Youth are also more likely to report worsening mental health.
Green, D., Kesselman, J. R., & Tedds, L. (2020, May 21). Considerations for basic income as a COVID-19 response. The School of Public Policy Publications, SPP Briefing Paper, 13(11). Calgary, AB: University of Calgary.
The effectiveness of policies like the CERB (Canada Emergency Response Benefit) during the pandemic has raised the profile of basic income as a policy option. The goal in this briefing paper is to set out the key questions that must be answered in deciding whether and how to implement basic income, or any alternative social support policy. The message is that the design and implementation of a basic income policy requires careful, comprehensive, evidence-based consideration. The questions cover different topics, such as principles to define basic income, objectives, details of the program, eligibility conditions, amounts of the benefit, cost of the program, impact of the program on the economy and alternative programs with similar objectives.
Jeon, S.-H., & Ostrovsky, Y. (2020, May 20). The impact of COVID-19 on the gig economy: Short- and long-term concerns. StatCan COVID-19: Data to Insights for a Better Canada. Catalogue no. 45280001. Ottawa, ON: Statistics Canada, Government of Canada.
Gig workers (GWs) are over-represented in the services industry, which has been severely impacted by the COVID-19 pandemic. The authors argue that the impact of COVID-19 on GWs is likely to be unevenly distributed, largely depending on the nature and type of gig work. Immediate effects will depend on certain characteristics, mainly age, place of residence and industry of work. Younger GWs are more likely to be affected than older ones, who may have diverse sources of income (e.g., pension). GWs in professional, scientific and technical services may be able to continue working during the pandemic compared to those requiring face-to-face interactions with customers. The authors also predict that COVID-19 may accelerate the expansion of online platforms and crowdsourcing spaces, which in turn could increase the size of the gig economy.
DeAntonio, D. (2020, May 14). The Week Ahead – U.S., Europe, Asia-Pacific. High Technology Is North America’s Biggest Corporate Borrower. New York: Moody’s Analytics.
According to the Bureau of Labor Statistics (BLS), the U.S. unemployment rate and the measure of labour underutilization jumped to 14.7% and 22.8%, respectively, in April 2020. However, both measures underestimate the current economic situation since many workers were absent from work due to COVID-19-related business closures and classified as “employed but absent from work” rather than unemployed. The number of workers shifting from employed to not in the labour force was five million higher than for a typical April. Taking these two factors into account brings the unemployment rate and the labour underutilization rate to over 22% and 30% respectively.
VSE. (2020, May 14). VSE COVID-19 risk/reward assessment tool. University of British Columbia, Vancouver School of Economics.
The VSE COVID Risk/Reward Assessment Tool compares the risks and benefits of re-opening different sectors of the British Columbia economy (over 300 occupations in over 100 industries). It features an interactive figure and a table with more detailed information on the risks associated with specific sectors and occupations. The analysis of risk is presented according to three main categories: 1) risks associated with work in a particular occupation (“Job description detail”), 2) importance of the sector in the BC economy (“Economic factors detail”) and 3) risks associated with factors outside of the work place (“Household detail”).
Landier, A., & Thesmar, D. (2020, May 13). Earnings expectations in the COVID crisis. NBER Working Paper 27160. Cambridge, MA: National Bureau of Economic Research.
To better understand how the stock market reacted to the COVID-19 pandemic, this study analyzes stock prices and future earnings estimates from the Institutional Broker’s Estimate System (IBES) database. First, the authors describe expectations dynamics about future corporate earnings. They show that the term structure of earnings expectations has shifted over the course of March, April and May 2020 in a manner that deviates from the literature on expectations and stock returns. Second, they find that discount rate shocks are the main driver of the V-shaped evolution of stock prices.
Harris, J. E. (2020, May 12). Reopening under COVID-19: What to watch for. NBER Working Paper 27166. Cambridge, MA: National Bureau of Economic Research.
Using a variety of case studies from across the United States, the author investigates the quality of COVID-19 status indicators, as well as social and health policies, used to contain the virus at the local level. Effective status indicators must produce reliable, accurate, timely information about the local trends, spread, and other key indicators, such as morbidity rates. The purpose of this exercise is to find measures and strategies for monitoring COVID-19 that can be used across the US as economy reopens. Using observations from places such as Wisconsin and Orange County, universal testing has proven the most effective way to monitor trends. Moreover, specifically coupling testing with statistics and outcomes generated by hospitals and other health care institutions enhances the depth and timeliness of COVID-19 monitoring.
Statistics Canada. (2020, May 12). Impacts of the COVID-19 pandemic on postsecondary students. The Daily. Ottawa, ON: Government of Canada.
Statistics Canada collected data via an online questionnaire from more than 100,000 postsecondary students between April 19 and May 1 about how the COVID-19 pandemic has affected their academic, labour market and financial situations. Most participants reported an academic disruption because of the pandemic and a major impact on their employment plans. Many student participants also reported significant concerns about their financial situation because of COVID-19.
Statistics Canada. (2020, May 11). Impact of COVID-19 on Small Businesses in Canada. StatCan COVID-19: Data to Insights for a Better Canada. Ottawa, ON: Government of Canada.
Statistics Canada collected data from 12,600 businesses that took part in an online questionnaire between April 3 and April 24 about how COVID-19 has affected them. The findings show that small businesses (fewer than 100 employees) were more likely to report that their revenues from Q1 were down by 20% or more (compared to Q1 last year) than those with 100+ employees. They also found that nearly 41% of businesses overall reported laying off employees, compared to 80% of small businesses. Small businesses were also more likely to request credit from financial institutions to cover operating costs due to COVID-19 and were slightly more likely to have their rent deferred.
Furceri, D., Loungani, P., Ostry, J. D., & Pizzuto, P. (2020, May 1). Will Covid-19 affect inequality? Evidence from past pandemics. COVID Economics Vetted and Real-Time Papers, Issue 12, 138–157. London: Centre for Economic and Policy Research.
Since the Gini coefficient (a statistical measure of income distribution) increased globally following other recent pandemics such as H1N1, the authors investigate the potential impact of COVID-19 on income inequality. The dataset draws from various sources, including the World Bank and the International Labour Organization. The authors estimate impulse response functions to analyze the possible effects of COVID-19 on future income inequality. They find evidence that the effects of COVID-19 on inequality will be larger than those from other recent pandemics. They estimate increased income shares for higher deciles and reduced employment-to-population ratios for those with basic education compared to higher education.
Rojas, F. L., Jiang, X., Montenovo, L., Simon, K. I., Weinberg, B. A., & Wing, C. (2020, May). Is the cure worse than the problem itself? Immediate labor market effects of COVID-19 case rates and school closures in the U.S. NBER Working Paper 27127. Cambridge, MA: National Bureau of Economic Research.
This paper looks at whether the nationwide public health shock of the COVID-19 pandemic or individual state mitigation policies had a greater effect on increasing unemployment in the United States. The authors found that the unprecedented increase in new unemployment claims between March 15–28 was similar across all states. This suggests that most labour market impacts were caused by the nationwide response to the health shock itself rather than by individual state policies (such as school closures) aimed at controlling the spread of the virus.
Acemoglu, D., Chernozhukov, V., Werning, I., & Whinston, M. (2020, May). A multi-risk SIR model with optimally targeted lockdown. NBER Working Paper 27102. Cambridge, MA: National Bureau of Economic Research.
This paper uses the SIR (Susceptible–Infectious–Recovered) model to help both researchers and policymakers better understand the spread and ultimate containment of an infection. In this model, those who recover are immune to the disease and thus the susceptible population declines over time. Using three groups — young (20–44), middle-aged (45–65) and older (65+) — the authors conduct a quantitative analysis of optimal policy. An approach that treats these three groups uniformly and involves a relatively strict, lengthy lockdown would result in both high economic damage and high mortality rates for older individuals. Better social outcomes are possible with targeted policies that treat these three age groups differently. For instance, a strict lockdown on the oldest group can minimize both economic losses and deaths.
Adler, D., & Breznitz, D. (2020, May). Reshoring supply chains: A practical policy agenda. American Affairs, 4(2).
In the United States, the COVID-19 crisis has revealed the fact that most essential health care supplies, such as face masks and ventilators, are produced abroad. This article calls for policy that examines the larger economic issues surrounding offshoring and finding ways to bring back more production into the United States. The authors argue that reshoring key sectors can reduce economic inequality and provide more job opportunities in the manufacturing sector.
Alfaro, L., Faia, E., Lamersdorf, N., & Saidi, F. (2020, May). Social interactions in pandemics: Fear, altruism, and reciprocity. NBER Working Paper 27134. Cambridge, MA: National Bureau of Economic Research.
Predicting the spread of disease is difficult without also accounting for human behaviour. This is especially important as countries consider optimal policy responses to guide the re-opening of their respective economies since excessive precautionary behaviour may trigger demand spirals and dampen recovery. Combining an SIR-network model with Apple COVID daily mobility data for 89 cities around the world, fear is seen to have a negative impact on mobility (walking, driving, transit use) at the city level. Moreover, the direct effect of explicit regulations restricting mobility are muted in cases where individuals are more patient, have higher degrees of altruism and exhibit less negative reciprocity, signalling a higher likelihood that groups of people are linked to each other.
Aum, S., Lee, S. Y., & Shin, Y. (2020, May). COVID-19 doesn’t need lockdowns to destroy jobs: The effect of local outbreaks in Korea. NBER Working Paper 27264. Cambridge, MA: National Bureau of Economic Research.
Using a difference-in-difference model, the authors estimate the causal effect of COVID-19 lockdowns on the labour market. They do so by looking at countries that implemented a severe lockdown and countries, such as Korea, that did not. Their estimates imply that a one per thousand increase in infections caused a 2–3% drop in local employment in the absence of a lockdown. In countries such as the US and UK, where large-scale lockdowns were implemented, this drop ranges between 5–6%. This suggests that COVID-19 itself, rather than the lockdown, is responsible for a considerable portion of job losses. Lifting lockdowns around the world, therefore, may lead to only modest job recovery unless infection rates fall.
Barrero, J. M., Bloom, N., & Davis, S. J. (2020, May). COVID-19 is also a reallocation shock. Working Paper No. 2020-59. University of Chicago, Becker Friedman Institute.
The authors draw on firm-level employment forecasts from the Survey of Business Uncertainty to estimate that 42% of recent layoffs in the US will result in permanent job loss. They anticipate a drawn-out economic recovery from the COVID-19 shock, even if the pandemic is largely controlled within a few months. The authors also suggest that unemployment benefit levels that exceed worker earnings, policies that subsidize employee retention, occupational licensing restrictions and regulatory barriers to business formation will impede reallocation responses to the COVID-19 shock.
Beland, L.-P., Brodeur, A., Mikola, D., & Wright, T. (2020, May). The short-term economic consequences of COVID-19: Occupation tasks and mental health in Canada. IZA DP No. 13254. Bonn, Germany: IZA Institute of Labor Economics.
The authors investigate the negative impact of the pandemic on unemployment, labour force participation, hours and wages in Canada. The largest effects observed were for younger, unmarried, less-educated workers. Results also suggest that the impact of the pandemic was significantly worse for those more exposed to the disease or working in proximity to coworkers. The effects were significantly less severe for essential workers and those who could work remotely. In terms of mental health consequences, using the Canadian Perspective Survey, the authors found that individuals absent from work due to COVID-19 were more likely to fear meeting financial obligations and losing their job.
Borjas, G. J., & Cassidy, H. (2020, May). The adverse effect of the COVID-19 labor market shock on immigrant employment. NBER Working Paper 27243. Cambridge, MA: National Bureau of Economic Research.
Using CPS (Current Population Survey) microdata, the authors of this paper looked for differences in the COVID-19 labour market shock for immigrant males versus US-born males. They found that pandemic-related job losses reversed which group was more likely to be employed. Historically, immigrant males were more likely than US-born males to be employed. Overall, immigrant men have now become relatively more likely to lose a job and relatively less likely to find a job compared to US-born males.
Campello, M., Kankanhalli, G., & Muthukrishnan, P. (2020, May). Corporate hiring under COVID-19: Labor market concentration, downskilling, and income inequality. NBER Working Paper 27208. Cambridge, MA: National Bureau of Economic Research.
This paper examines the impact of COVID-19 on job postings. Using data from LinkUp, a provider of job market data and analytics in US, the authors find that firms have reduced job postings for high-skill jobs more than for low-skill jobs. Scaling back on hiring, especially high-skill hiring (called downskilling), is more severe in low-income and higher-inequality areas. Hiring cuts have also been greater in unionized industries. This study also discusses the important challenges that policy makers face in promoting job creation in a post-pandemic recovery.
Cicala, S., Holland, S. P., Mansur, E. T., Muller, N. Z., & Yates, A. J. (2020, May). Expected health effects of reduced air pollution from COVID-19 social distancing. NBER Working Paper 27135. Cambridge, MA: National Bureau of Economic Research.
This paper looks at the impact of social distancing on emissions and the resulting expected health effects in the United States. Reduced personal vehicle travel and electricity consumption are the two key factors. Using cell phone mobility data, the authors found that vehicle travel dropped 40% by mid-April and electricity consumption fell by about 6%. A month of social distancing decreased the expected number of premature deaths due to air pollution by 360 (25% of the baseline of 1500 deaths). They also estimate that CO2 emissions from these sources fell by 46 million metric tons.
Coibion, O., Gorodnichenko, Y., & Weber, M. (2020, May). The cost of the COVID-19 crisis: Lockdowns, macroeconomic expectations, and consumer spending. NBER Working Paper 27141. Cambridge, MA: National Bureau of Economic Research.
Using large-scale surveys representative of US households, the authors assess the impact of different timings of local COVID-19 lockdowns on household spending, income/wealth losses and macroeconomic expectations. They found a significant decline in consumer spending and pronounced reductions in income and wealth. Close to 50% of respondents reported wealth losses ranging from $5,293 to $33,482. Households in counties with earlier lockdown dates predicted that the unemployment rate would rise 13 percentage points over the next twelve months and continue to increase over the next three to five years. Lower inflation, higher uncertainty and lower mortgage rates are also expected over the next decade. The authors note that their analysis is limited to the immediate effects of lockdowns and thus likely understate the impact of the pandemic.
Environics Institute for Survey Research, Future Skills Centre, Ted Rogers School of Management, & Diversity Institute. (2020, May). Canadian’s shifting outlook on employment: 2020 survey on employment and skills, preliminary report. Toronto, ON: Environics Institute for Survey Research.
This multi-partner study found that Canadians did not lose confidence in themselves or in society’s safety despite the impact of the COVID-19 pandemic. Amid the pandemic, 54% reported that they felt they could bounce back quickly after these hard times. Individuals with higher levels of education and income reported higher levels confidence. Workers in less secure positions said that they felt certain to be able to access the resources they need.
Fairlie, R. W., Couch. K., & Xu, H. (2020, May). The impacts of COVID-19 on minority unemployment: First evidence from April 2020 CPS microdata. NBER Working Paper 27246. Cambridge, MA: National Bureau of Economic Research.
Using CPS (Current Population Survey) microdata and a difference-in-difference model, the authors investigate the impacts of COVID-19 on minority unemployment in the US. The overall unemployment rate was 14.7% in the period studied. Estimates show an increase in African American unemployment to 16.6%, which is less than anticipated based on previous recessions. The unemployment rate for Latinx (a gender-neutral neologism for Latina/Latino) reached 18.2%, however. African Americans were slightly disproportionately impacted by COVID-19 because a slightly favourable industry distribution partially protected them. Latinx were disproportionately hit hard due to occupation and skill differences from whites.
Granja, J., Makridis, C., Yannelis, C., & Zwick, E. (2020, May). Did the paycheck protection program hit the target? NBER Working Paper 27095. Cambridge, MA: National Bureau of Economic Research.
This paper looks at the new Paycheck Protection Program (PPP) that was part of the United States’ initial response to COVID-19. Using data on the distribution of PPP loans and high-frequency micro-level employment data, they found a disproportionate allocation to areas less affected by the crisis. Areas exposed to banks with a higher PPP lending share compared to their pre-policy business lending market share received a disproportionately larger number of PPP loans.
Jinjarak, Y., Ahmed, R., Nair-Desai, S., Xin, W., & Aizenman, J. (2020, May). Accounting for global COVID-19 diffusion patterns, January–April 2020. NBER Working Paper 27185. Cambridge, MA: National Bureau of Economic Research.
To help understand global pandemic diffusion patterns, the authors examine the relationship between COVID-19 mortality rates and specific country-level policy interventions aimed to limit social contact. COVID-19 policy and case data was collected by Oxford University and John Hopkins University, Apple mobility data and various controls. As well, OECD and Emerging Market data for the first 97 days of the pandemic was used. The authors found that more stringent pandemic policies resulted in lower mortality growth rates. In addition, countries with more stringent policies in place prior to the first COVID-19 death had lower mortality rates and flatter mortality curves. This effect is more pronounced in countries with an aging population, a higher population density, a greater share of employees in vulnerable occupations, greater democratic freedom, more international travel and a greater distance from the equator.
Mongey, S., Pilossoph, L., & Weinberg, A. (2020, May). Which workers bear the burden of social distancing policies? NBER Working Paper 27085. Cambridge, MA: National Bureau of Economic Research.
Using two indicators created from US Occupational Information Network — O*NET — data, the authors of this report look at workers in occupations whose possibility of working remotely is unlikely or who have a high degree of physical proximity in the workplace. These workers tend, on average, to be less educated, to earn lower incomes, to possess fewer liquid assets and to rent rather than own their homes. In addition, workers employed in occupations less likely to be conducted from home experienced larger job losses than those whose occupations can be done remotely.
United Nations. (2020, May). Policy brief: The impact of COVID-19 on older persons. New York/Geneva
During the COVID-19 pandemic, those over 80 years of age face a mortality rate five times higher than other age groups. This United Nations policy brief elaborates on these impacts and identifies both immediate and longer-term policy responses needed to protect the elderly. They recommend strengthening older people’s social inclusion and solidarity during physical distancing. Increasing their access to digital technologies, protecting their vulnerability by investing in universal health coverage and social protection, and strengthening the applicable national and international legal frameworks are all suggested. Furthermore, risks faced by older persons in accessing health care need to be properly monitored and fully addressed.
WEF. (2020, May). COVID-19 risks outlook: A preliminary mapping and its implications. Geneva, Switzerland: World Economic Forum in partnership with Marsh & McLennan and Zurich Insurance Group.
Nearly 350 senior risk professionals participated in a COVID-19 Risks Perception Survey. This report taps into that data to provide a preliminary picture of amplified and emerging risks due to the pandemic. Four key areas of significant challenge emerge as global concerns: 1) economic risks, 2) environmental risks, 3) societal risks and 4) cybersecurity risks. A prolonged global recession over the next 18 months is likely with severely diminished economic activity due to COVID-19. New working patterns that rely on the Internet are more likely to be affected by cyberattacks and data fraud if proactive action is not taken. The report concludes, however, that this crisis offers a unique opportunity to shape a better world.
ILO. (2020, April 29). ILO Monitor: COVID-19 and the world of work, 3rd ed. Geneva, Switzerland: International Labour Organization.
This third edition of the ILO Monitor updates estimates and analysis on the effects of COVID-19 on the world of work. Key messages include that the proportion of workers living in countries with recommended or required workplace closures has decreased from 81% to 68% over the last two weeks. This is mainly driven by lifting workplace closures in China. The global working hours in Q2 are expected to be 10.5% lower than in the last pre-crisis quarter. This is equivalent to 305 million full-time jobs. Estimates also indicate that the Americas (12.4%) and Europe and Central Asia (11.8%) will experience the greatest loss in working hours. The report also highlights the vulnerabilities of own-account workers in emerging and developing countries.
COVID-19 Crisis Business Continuity and Trade Working Group. (2020, April 24). Restart playbook must balance risks with economic costs. Crisis Working Group Report, Communique #5. Toronto: C.D. Howe Institute.
The C.D. Howe Institute created a working group of industry experts and economists, meeting weekly to identify and prioritize the policy challenges of COVID-19. In this communique, the working group makes several recommendations for restarting the Canadian economy after the pandemic closures. Specifically, they note that provincial governments are best positioned to determine when and how to relax emergency measures. However, the Federal Government should establish appropriate pre-conditions based on the advice of public health experts. Policy makers must also define acceptable levels for the risk of transmission and provide a framework for assessing workplace risk. The Federal Government should also consider how best to phase out emergency benefits (i.e., the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy).
Ding, W., Levine, R., Lin, C., & Xie, W. (2020, April 23). Corporate immunity to the COVID-19 pandemic. NBER Working Paper 27055. Cambridge, MA: National Bureau of Economic Research.
This study examines pre-2020 corporate characteristics that make firms more resilient to the impacts of the COVID-19 pandemic. The authors compare the stock price performance of over 6000 firms across 56 countries for Q1 of 2020 considering five characteristics: 1) financial condition (e.g., cash flow or profitability), 2) international supply chain and customer location exposure to COVID-19, 3) corporate social responsibility (CSR) activities, 4) corporate governance systems and 5) large-committed ownership structures. The study finds that firms with stronger pre-2020 financial conditions showed better stock price reactions compared to similar firms. Those whose supply chains and customers have greater exposure to COVID-19 also experienced a greater pandemic-induced stock price drop. Similarly, those with stronger CSR policies, flexible corporate structure, and large ownership also experienced better stock price reactions.
Schmitt-Grohé, D., Teoh, K., & Uribe, M. (2020, April 21). COVID-19: Testing inequality in New York City. NBER Working Paper 27019. Cambridge, MA: National Bureau of Economic Research.
Using data from the New York City Department of Health and Mental Hygiene and the American Community Survey, this paper finds that COVID-19 tests were distributed at nearly the exact same rate across income levels as measured by zip code. The 10% of the richest areas and 10% of the poorest received 11% and 10% of the tests, respectively. Although tests were distributed equally across income groups, residents in low-income neighbourhoods tested positive at a much higher rate — 65% versus 50% for higher income areas. Therefore, since COVID-19 is more prevalent in lower income neighbourhoods, the equal share of tests in effect reflects unequal access.
St-Denis, X. (2020, April 19). Sociodemographic determinants of occupational risks of exposure to COVID-19 in Canada. Department of Sociology, University of Toronto.
This paper explores how occupational exposure risks vary by labour force characteristics in the Canadian context. The author uses Census and O*Net data to provide occupational information on the levels of physical proximity to others and frequency of exposure to infection or disease. The study finds that women work in occupations associated with significantly higher risks of exposure to COVID-19 than men. Occupations in health, sales and service, education, law, and social, community and government services demonstrate higher risks of exposure than other categories.
Although workers aged 65 or older work in occupations with a lower degree of physical proximity, their frequency of exposure is slightly higher than for younger workers. There are minimal differences in the occupational risks of exposure to COVID-19 for Canadian-born versus immigrant workers. Finally, in terms of earning levels, low-income workers are employed in occupations that put them at greater risk of exposure to COVID-19. These workers are also more likely to face strong financial disincentives to be absent from work if they contract the virus, which may increase the risk of workplace transmission.
Amarasinghe, U., Motha-Pollock, A., Felder, M., & Oschinski, M. (2020, April 17). COVID-19 and Ontario’s sales and service workers: Who is most vulnerable? Toronto: MaRS Discovery District.
By focusing on Ontario’s sales and service industry, MaRS uses March 2020 Labour Force Survey (LFS) data to measure the vulnerability of workers to the risk of COVID-19 exposure. For this study, they mapped the list of essential workplaces in Ontario to industries (NAICS), and used the methodology of the New York Times and the Brookfield Institute on two scores: 1) disease exposure and 2) physical proximity to others by occupation. The findings suggest that nearly 70% of sales and service workers in Ontario (1 million) have been deemed essential. More than 400,000 of them have moderate disease exposure risk and work in high physical proximity to others. This sector includes many part-time employees, people over 60, and immigrants without citizenship or permanent resident status.
IMF. (2020, April 17). Policy responses to COVID-19. Washington, DC: International Monetary Fund.
The IMF summarizes the key economic responses that 193 countries have taken to reduce the human and economic impact of the pandemic. This document is updated regularly and includes key policies related to COVID-19. However, the list might not fully reflect all policies implemented, as changes are made rapidly.
Jackson, J., Weiss, M., Schwarzenberg, A., & Nelson, R. (2020, April 17). Global economic effects of COVID-19. Washington, DC: Congressional Research Service.
This report summarizes the global economic effects and policy responses to the pandemic provided by governments and international institutions. The global economy could decline by 3% in 2020 before growing by 5.8% in 2021, based on IMF’s forecast of April 14, 2020. Global trade is projected to fall by 11% and oil prices are projected to fall by 42% in 2020. However, the forecast assumes that the crisis fades by the end of the first half of 2020 and that containment effects can be reversed.
Furthermore, among most developed and major developing economies, countries highly dependent on trade and commodity exports — such as Canada, Germany, Italy, Japan, Mexico, and South Korea — are projected to be the most negatively affected by the economic slowdown associated with the virus. The OECD also notes that production declines in China will have spillover effects around the world given that China is a primary customer for many commodities.
Aaronson, S., & Alba, F. (2020, April 15). The unemployment impacts of COVID-19: Lessons from the Great Recession. Washington, DC: Brookings Institution.
Data from previous crises — such as Hurricane Katrina and Great Recession of 2007–2009 — show that geographic areas are often impacted unevenly. Any resulting spikes the unemployment rate are temporary, however. This analysis of 138 US metropolitan areas that have experienced idiosyncratic shocks shows that unemployment rates tend to rebound after the crisis has passed.
As with previous crises, the COVID-19 pandemic has impacted metropolitan areas unevenly. For example, those metropolitan areas first affected by the virus closed non-essential businesses sooner. In addition, the economies of areas with greater dependency on energy, tourism and hospitality have suffered greater slowdowns than those relying more on agriculture or professional services. Policy makers should consider the different challenges faced by each locality as they suggest approaches to providing aid. The solutions provided should attempt to reduce any disparities between them.
Stojkoski, V., Utkovski, Z., Jolakoski, P., Tevdovski, D., & Kocarev, L. (2020, April 14). The socio-economic determinants of the coronavirus disease (COVID-19) pandemic. SSRN Electronic Journal.
This paper focuses on the socio-economic determinants that contribute to COVID-19 cases/deaths among countries. By leveraging Bayesian model averaging techniques and country level data, the authors identify 29 potential determinants grouped into several broad categories: healthcare infrastructure, national health statistics, societal characteristics, economic performance, demographic structure and natural environment. Their results suggest two determinants with a strong correlation to coronavirus cases: population size and government health expenditures. More populated countries show greater resistance to being infected by the virus, whereas countries with larger government health expenditures display greater susceptibility. However, no determinant could predict coronavirus deaths per capita.
Rousseau, H.-P. (2020, April 9). COVID-19: Economic policy options for managing and recovering from the crisis in Quebec and Canada. Montréal, QC: CIRANO.
The author believes that this unprecedented health crisis provides a critical opportunity for economic and democratic development. He presents a set of economic policy suggestions in response to the economic impacts of COVID-19. The plan emphasizes three components: 1) managing the health crisis, 2) financially supporting individuals and businesses affected in the short-term, and 3) improving economic infrastructure to mitigate the economic impacts of future health crises in the long-term. The new economic policy must include long-term
strategies for when the health crisis subsides and the economic recovery has begun. For example, local supply chains of food, medical supplies, or other essential goods will be needed when global supply chains are disrupted. New forms of co-operation and collaboration between the private and public sectors will also be required.
APEC. (2020, April 8). Occupational analysis. Halifax, NS: Atlantic Provinces Economic Council.
Preliminary estimates from Atlantic Canada, based on 4-digit National Occupational Classification (NOC) codes, show that about 70% of workers must perform their jobs at their place of work (e.g., manufacturing plants, construction sites, hospitals and restaurants), or must work directly with clients (e.g., hairdressers and massage therapists). These workers are at high risk of being laid off if they cannot adjust their work to meet the new health and safety measures of the COVID-19 epidemic. Even for those 30% who can arrange to work from home, there is still the risk of layoff because of the overall reduction in demand for goods and services.
Baker McKenzie. (2020, April 8). Beyond COVID-19: Supply chain resilience holds key to recovery. Chicago, IL.
Using data from Oxford Economics, Baker McKenzie found that the automotive, textile, and electronics sectors are the hardest hit by the COVID-19 pandemic. The good news is that they are also likely to rebound by the first half of 2021. The report suggests that businesses must take quick action to tackle operational, labour, and demand/supply constraints. They must also revisit strategic planning and re-consider business models post-COVID-19. For example, work models may adopt and use more technology, agility programs and virtual meetings. The pandemic may well accelerate the digital transformation of the workplace, not just during the massive shift to self-isolation but also into the future.
Brynjolfsson, E., Horton, J., Ozimek, A., Rock, D., Sharma, G., & Tu Ye, H.-Y. (2020, April 8). COVID-19 and remote work: An early look at US data. Cambridge, MA: National Bureau of Economic Research.
A survey by MIT researchers of 25,000 Americans, conducted from April 1–5, 2020, posed a simple question: “Have you started to work from home in the last 4 weeks?” The authors found that 34% of workers have shifted to remote work due to COVID-19, and 11% have been laid-off (permanently or temporarily). Younger people were more likely to switch to remote work, while there were no significant gender differences. In the next round of surveys, more specific questions will be asked such as “what percentage of tasks can be done remotely?” and “how does remote work vary across professions and industries?”
ILO. (2020, April 7). ILO monitor 2nd edition: COVID-19 and the world of work — Updated estimates and analysis. Geneva, Switzerland: International Labour Organization.
The ILO has updated their estimates of the impact of COVID-19 on the world of work. As of April 1, 2020, lockdown measures across the world have affected 2.7 billion workers, representing 81% of the world’s workforce. The ILO estimates that global working hours in the second quarter of 2020 will decrease by 6.7% relative to the first quarter, equivalent to 195 million full-time workers.
Furthermore, the shock to labour markets is having a larger impact on employment in specific sectors such as accommodation, food services, manufacturing, wholesale and retail trade, real estate and other business activities. These sectors comprise almost 38% of the global workforce.
Workers in developing countries, the report notes, are particularly at risk. These countries tend to have lower levels of social protection and higher levels of informal employment. Informal workers have a high risk both of being exposed to the virus and of falling deeper into poverty due to lockdown measures. India has the highest share of informal workers, at almost 90%. Stringent lockdown measures have greatly affected these workers.
Burning Glass Technologies. (2020, April 2). COVID-19 impact on jobs. Boston, MA.
Burning Glass is using its database to measure the economic shock of the coronavirus pandemic on weekly job postings in the United States. According to this report, job postings declined 29% during March 2020. Generally, the decline is larger in states with heavier reliance on such industries as tourism or manufacturing. However, job postings have increased for some health care roles such as pharmacists (11%), respiratory therapists (9%), and registered nurses (8%).
Burning Glass updates their public data frequently and publish blog posts on their highlighted findings.
Alon, T. M., Doepke, M., Olmstead-Rumsey, J., & Tertilt, M. (2020, April). The impact of COVID-19 on gender equality. NBER Working Paper 26947. Cambridge, MA: National Bureau of Economic Research.
The fall in employment resulting from social distancing measures in response to COVID-19 has largely affected sectors with high female employment. Further, based on the existing distribution of childcare duties, the challenges created by school and daycare closures have affected the employment of mothers to a greater extent than fathers. Since past labour market experience is a strong predictor of future earnings, the loss of work experience affecting working mothers, and especially single moms, is likely to have persistent earnings impacts beyond the crisis.
However, the authors also expect that the consequences of COVID-19 may have some benefits in the long-term by promoting greater gender equality in the labour market. First, businesses are rapidly adopting more flexible work arrangements, which are likely to persist. Second, historic gender norms in the division of household labour may change as many fathers must now take primary responsibility for childcare.
Baker, S. R., Bloom, N., Davis, S. J., & Terry, S. J. (2020, April). COVID-Induced economic uncertainty. NBER Working Paper 26983. Cambridge, MA: National Bureau of Economic Research.
This paper assesses the short- and medium-term macroeconomic effects of COVID-19 using three uncertainty indicators: 1) stock market volatility, 2) newspaper-based economic uncertainty, and 3) subjective uncertainty in business expectation surveys. The authors use data on US real GDP and an empirical model of disaster effects developed by Baker et al. (2020) to estimate the causal impact on country-level output growth. Using stock market measures to calibrate COVID-19 shocks, their results show a nearly 20% contraction (on a year-over-year basis) in US real GDP as of 2020 Q4: 9% in 2020 Q2 plus a peak contraction of 11% in Q4.
Bartik, A. W., Bertand, M., Cullen Z. B., Glaeser, E. L., Luca, M., & Stanton, C. T. (2020, April). How are small businesses adjusting to COVID-19? Early evidence from a survey. NBER Working Paper 26989. Cambridge, MA: National Bureau of Economic Research.
To better understand the impact of COVID-19 on small businesses in the US, 5,819 surveys were conducted with members of “Alignable,” a network-based platform focused on the small business ecosystem. On average, businesses reported reducing their employee count by 40% compared to the beginning of 2020. In addition, of those firms surveyed, 43% had to close temporarily, with the median businesses reporting monthly expenses over $10,000. Although most indicated that they planned to apply for government assistance through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), they expressed concern about the administrative and logistical hassles of accessing aid.
Bethune, Z. A., & Korinek, A. (2020, April). COVID-19 infection externalities: Trading off lives vs. livelihoods. NBER Working Paper 27009. Cambridge, MA: National Bureau of Economic Research.
This paper uses epidemiological Susceptible-Infectious-Recovered (SIR) models to quantify the impacts of social and economic interactions in transmitting infectious diseases. When otherwise rational individuals misevaluate the effects of their activities, the risk of infection for others is greater. If those infected engage in full social and economic activity while those susceptible reduce their activity, then full recovery will only be achieved once herd immunity is reached years later. The alternative approach is to impose restrictions on those infected to drive their activity close to zero while only slightly reducing the activity of the susceptible. This second approach is socially optimal since it contains and eradicates the disease more quickly and with a much milder recession.
Buheji, M., Cunha, K. C., Beka, G., Mavrić, B., Souza, Y. L., Silva, S. S., Hanafi, M., & Yein, T. C. (2020, April). The extent of COVID-19 pandemic socio-economic impact on global poverty: A global integrative multidisciplinary review. American Journal of Economics, 10(4): 213–224.
This paper reviews the literature on how the pandemic impacts poor communities. The authors looked at research on the economic consequences of the pandemic on four different continents. They highlight the difficulty for the poor to adhere to self-isolation and social distancing measures. Several strategies to minimize the impact of the pandemic on the livelihoods and the socioeconomic activities of the underprivileged are provided.
Cadena, A., Child, F., Craven, M., Ferrari, F., Fine, D., Franco, J., & Wilson, M. (2020, April). How to restart national economies during the coronavirus crisis. New York, NY: McKinsey & Company.
This McKinsey & Company public report presents a strategy for restarting economies in stages. The key is that public health risk inform the level of economic and social restrictions. The methodology offers a risk matrix of virus spread and public health system readiness. This corresponds to a restart strategy with four steps that determine the economic openness and population mobility. At each stage, governments can implement policies that prioritize sectors to open based on economic relevance and risk of transmission. For example, high-risk populations remain in lock-down longer and essential sectors open sooner than other economic sectors. Most importantly, the stage of re-opening for an economy depends on the region’s placement on the risk matrix.
Coibion, O., Gorodnichenko, Y., & Weber, M. (2020, April). Labor markets during the COVID-19 crisis: A preliminary view. NBER Working Paper 27017. Cambridge, MA: National Bureau of Economic Research.
This study uses a repeat large-scale panel survey of 80–90 thousand US households — whose purchases are tracked daily — to measure the labour impact of COVID-19. They estimate that 20 million workers lost their jobs by April 6 2020 (far more jobs than in the Great Recession of 2007–2009). The results also highlighted that many of those who lost jobs are not actively looking to find new ones. As a result, the unemployment rate rises only about 2 percentage points, while participation in the labour force has declined by 7 percentage points.
Dingel, J. I., & Neiman, B. (2020, April). How many jobs can be done at home? NBER Working Paper 26948. Cambridge, MA: National Bureau of Economic Research.
Following the evaluation of social distancing measures in slowing down the spread of COVID-19, the authors look into US occupations that can be performed at home. They examine the share of total wages paid to such jobs, as well as how they vary across cities and industries. All US occupations are classified based on responses to two O*NET surveys covering the context and activities of each occupation.
The paper suggests that 34% of US jobs could be performed at home, which accounts for 44% of all wages, assuming the same number of hours worked for all occupations. The percentage is much higher for urban than rural areas. Most jobs in the finance, corporate management, professional and scientific industries could plausibly be done from home, unlike occupations in the agriculture, hospitality or retail sectors.
Export Development Canada. (2020, April). COVID-19 crisis: Challenges mount for many Canadian sectors. Ottawa: EDC.
In this report, EDC provides an initial assessment of the potential impacts of COVID-19 on different sectors of Canada’s economy. Their analysis is based on the initial positions of three factors: cash flow and working capital; profit and return ratios; and borrowing and leverage ratios. They also evaluated sectors in terms of stock market losses and potential borrowing pressures.
Based on their analysis, vulnerable sectors include the following: oil, gas and cleantech; accommodation and food services; entertainment and tourism; personal services; information and cultural industries; transportation; manufacturing (especially auto, aerospace and related parts); real estate and leasing; and agriculture and forestry exporters. In contrast, a few sectors are better positioned to help end the storm, such as education, health, social services, utilities and mining.
Fine, D., Klier, J., Mahajan, D., Raabe, N., Schubert, J., Singh, N., & Ungur, S. (2020, April). How to rebuild and reimagine jobs amid the coronavirus crisis. New York, NY: McKinsey & Company.
This McKinsey report discusses the strategies required to help support a labour and business recovery from COVID-19. They point to two main areas of focus. The first is to better understand who needs support to keep their job or to find new work, with particular emphasis on vulnerable groups and SMEs. The second is to build smart, cross-sector solutions to get that help to these individuals and organizations fast. This will be particular salient when restrictions on the movement of people begin to ease and businesses are allowed re-open. The authors also highlight the importance of ensuring that the right tools and mechanisms are place to help individuals develop the skills required to take up any new or different opportunities that might emerge.
Guerrieri, V., Lorenzoni, G., Straub, L., & Werning, I. (2020, April). Macroeconomic implications of COVID-19: Can negative supply shocks cause demand shortages? NBER Working Paper No. 26918. Cambridge, MA: National Bureau of Economic Research.
This paper addresses two theoretical questions: Can the COVID-19 supply shock lead to deficient demand? When — if at all — and how should governments intervene to correct for a recession? The authors have outlined a variety of conditions where a demand shortage leads to a reduction in output and employment that is larger than the supply shock itself (a Keynesian supply shock). Three factors would contribute to such deficient demand: 1) low substitutability, 2) incomplete markets and 3) constrained consumer liquidity.
The report also discusses the effects of various policies, arguing that the standard fiscal stimulus can be less effective. Additional models consider the effect of business closings, labour hoarding, and both private and public health concerns. The first best policy solution identified is to close down contact-intensive sectors and provide full insurance payments to affected workers.
Hamermesh, D. (2020, April). Lock-downs, loneliness and life satisfaction. NBER Working Paper 27018. Cambridge, MA: National Bureau of Economic Research.
This paper looks at the effects that lock-downs have on life satisfaction and happiness by using the 2012–2013 American Time Use Survey. Due to the lock-down measures imposed during the COVID-19 pandemic, life satisfaction increases for married people since they are spending more time together. In contrast, life satisfaction decreases for single people because they are spending more time alone. The large losses of work time and income due to this crisis, however, reverse the increased happiness for married people, and exacerbate the decreased happiness for singles.
Hassan, T. A., Hollander, S., van Lent, L., & Tahoun, A. (2020, April). Firm-level exposure to epidemic diseases: COVID-19, SARS, and H1N1. NBER Working Paper 26971. Cambridge, MA: National Bureau of Economic Research.
This paper constructs a method to measure firm-level exposure to epidemic diseases by counting the number of times the disease is mentioned in the quarterly earnings conference call that public-listed firms host with financial analysts. The authors gathered data on the transcripts of these conference calls from January 2001 to March 2020 for 11,943 firms headquartered in 84 countries.
The results show that 40% of the transcripts discuss the COVID-19 outbreak, a much larger percentage than all previous outbreaks. Concerns raised related to supply chain disruption, fall in demand, employee welfare, closures, production capacity reduction, increased uncertainty and the financial market. The authors also find evidence that firms with experience in dealing with SARS or H1N1 have more positive expectations about their ability to deal with the coronavirus outbreak.
Ludvigson S., Mai, S. & Ng, S. (2020, April). COVID19 and the Macroeconomic Effects of Costly Disasters.
In an effort to quantify the macroeconomic impact of COVID-19 on the US economy, the authors examine recent US disasters. In calibrating different shock profiles to reflect the unique nature of COVID-19, the study suggests that the economic impacts could last from two months to over a year (and vary by sector) and would be larger than any catastrophic event that has occurred in the past four decades. A conservative estimate leads to a cumulative loss in economic activity of 12.75% and an employment loss of 24 million jobs over a period of ten months.
Lund, S., Ellingrud, K., Hancock, B., & Manyika, J. (2020, April). COVID-19 and jobs: Monitoring the US impact on people and places. New York: McKinsey & Company.
This article emphasizes that the pandemic is accelerating structural shifts in the economy that were already underway. Using digital channels to reach consumers, automating operations, and allowing people to work remotely from home are examples. Moreover, some shifts in consumer behaviour and demand for new types of work may outlast the current public health crisis. Preparing for the “future of work” has gone from a distant hypothetical to a very immediate priority. Tens of millions of workers need support not only for today’s challenges but also to put themselves on a better footing for the future. Specifically, the article finds a significant overlap between workers who are vulnerable in the current downturn and those whose jobs are susceptible to automation in the future.
Lund, S., Ellingrud, K., Hancock, B., Manyika, J., & Dua, A. (2020, April). Lives and livelihoods: Assessing the near-term impact of COVID-19 on US workers. New York: McKinsey Global Institute.
Using data from the US Bureau of Labor Statistics, this article analyzes the vulnerability of more than 800 occupations to reductions in pay, furloughs or permanent layoffs. The analysis is based on whether or not the jobs are considered “essential” and whether they require close proximity to others. The authors found that 44 to 57 million jobs are vulnerable to reductions in hours or pay, with temporary or permanent layoffs possible. This could potentially affect up to one-third of the entire US labour force. However, this would not translate to a 30% unemployment rate since other industries face increasing demand. Businesses such as groceries, pharmacies and delivery services would hire two to three million new workers.
Massow, M., McDougall, B., & Weersink, A. (2020, April). Economic thoughts on the potential implications of COVID-19 on the Canadian dairy and poultry sectors. Canadian Journal of Agricultural Economics (pre-pub version).
This study explores the impact of COVID-19 on the Canadian dairy and poultry supply chain. Being a food production sector, many businesses are essential and have been able — to some extent — to mitigate economic losses relative to other sectors. The study suggests that some key structures, such as financially stable producers and shared losses, have been instrumental in determining the sector’s resilience. These structures are also likely to accelerate recovery post-pandemic. However, important potential long-run effects should be noted. For example, 1) producers are likely to shift to labour-saving technology and 2) the spike in demand for domestic food supply is likely to remain.
United Nations Conference on Trade and Development. (2020, April). Adapting the use of ASYCUDA World to the COVID-19 situation: Guidelines to customs administrations. Geneva, Switzerland: UNCTAD.
During the COVID-19 crisis, most countries have kept customs administrations and cross-border agencies running to allow trade in essential goods. ASYCUDA World — a computerized customs management system that covers most foreign trade procedures — provides necessary support to better deal with this pandemic by adopting policies and procedures that ensure the smooth functioning of cross-border trade.
UNCTAD’s guidelines assist customs administrations in coping with COVID-19 measures in various ways. These include further paperless processing, reviewing risk criteria by focusing on emergency medical supplies, and reviewing organization arrangements and tax policy changes to regulate activities correspondingly. Verifying information and communication technology infrastructure adjustments, and performing trade data analysis to monitor the impacts of the crisis on the value of imported goods are also recommended. Developed countries will require additional technical and financial assistance to sustain themselves throughout the pandemic and to recover financially from this unprecedented outbreak.
WEF. (2020, April). Impact of COVID-19 on the global financial system: Recommendations for policy-makers based on industry practitioner perspectives. Geneva, Switzerland: World Economic Forum.
This briefing summarizes the key findings from several dialogues organized by the World Economic Forum about the impact of COVID-19 on the global financial system. These discussions among senior leaders from financial institutions, international organizations, central banks and other institutions led to four main policy recommendations: 1) “flattening the curve” of firm mortality; 2) making sure that the public’s financial services needs are met digitally; 3) coordinating on a global level to maintain financial stability; and 4) providing further support to emerging markets and developing economies may be required from advanced economies.
Bank of Canada. (2020, March 31). Covid-19: Actions to support the economy and financial system. Ottawa, ON.
To help both individuals and businesses in Canada amid the disruption caused by COVID-19, the Bank of Canada has enacted several measures to reduce negative economic impacts and prevent long-term damage to Canada’s productive capacity. First, on March 27 it lowered the overnight rate target to 0.25%, which reduces payments on existing and new loans throughout the economy. It has also implemented an expanded buyback program for different types of bonds, thereby reducing the risk of illiquidity by facilitating the purchase and sale of bonds in the marketplace.
The Bank of Canada also launched the Banker’s Acceptance Purchase Facility (BAPF) — a core funding market and source of financing for small and medium-sized corporate borrowers in Canada. It also established the Provincial Money Market Purchase (PMMP) program to support short-term provincial borrowing. In addition, the Bank of Canada has intervened to help financial institutions obtain funding for lending by taking such steps, among others, as lengthening the term over which it lends money to banks and expanding the list of eligible institutions that can access their lending. Finally, the Bank is working with international policy makers and key economic and financial partners to reinforce well-functioning markets during this time.
Fujita, S., Moscarini, G., & Postel-Vinay, F. (2020, March 30). The labour market policy response to COVID-19 must save aggregate matching capital. London, UK: VoxEU CEPR Policy Portal.
Developed countries are now aggressively deploying fiscal and monetary policies to prevent a global economic catastrophe caused by the coronavirus. However, the authors suggest avoiding policies that would encourage a major, persistent reallocation of employment, which could result in the sudden destruction of firm-specific human capital and its customer base.
Instead, policies should facilitate quick but temporary emergency reallocation of employment, while preserving worker attachment to their previous jobs. This can be accomplished by providing businesses with interest-free loans to cover their fixed costs and by converting those loans to grants should the business rehire its former employees when normal operations resume. Maintaining worker attachment to their previous employers would preserve the aggregate stock of firm-specific human capital, while also avoiding any persistent mismatch that could turn this temporary economic shock into a prolonged stagnation.
Office of the Parliamentary Budget Officer. (2020, March 27). Scenario analysis: COVID-19 pandemic and oil price shocks. Ottawa, ON: Government of Canada.
Under assumptions that social distancing and self-isolation will remain in place through August 2020 and that members of OPEC and its partner countries will not limit the supply of oil, a real GDP growth rate of –5.1% for 2020 is one possible outcome of the COVID-19 pandemic and recent oil price shocks in Canada. In this scenario, real GDP declines by 2.5% in 2020 Q1 and then by 25% in 2020 Q2. Moreover, as oil and other commodity prices fall, the aggregate price level of the economy will fall too. Combined with real GDP declines, this will reduce the level of nominal GDP by $218 billion in 2020.
By 2020 Q3, Canada could be looking at an unemployment rate of 15%. In addition, the budget deficit for the 2019–20 fiscal year may increase to $26.7 billion and then to $112.7 billion in 2020–21. Coupled with the lower nominal GDP, these budgetary pressures may push the federal debt-to-GDP ratio to 38.1% in 2020–21. In order to ensure the economy is able to reach recovery speed given these economic and fiscal outcomes, it is likely that greater fiscal stimulus measures will be required — greater than those already provided, including the $28.5 billion in direct federal support announced on March 11 and March 18.
Angus Reid Institute. (2020, March 25). COVID-19: Those least equipped to endure economic downturn bearing the brunt of layoffs. Vancouver, BC.
According to this survey, 44% of Canadian households are working fewer hours due to the COVID-19 outbreak. Youth (aged 18–24) are the most likely to be affected: 45% report either having been laid off or working fewer hours, compared to 30% of those aged 25–34 and less than 30% of those aged 35–64.
Among those who report being laid off or working fewers hours, 66% report receiving no compensation from employers to cover the reduction in hours worked. For the remaining third who did receive compensation, 20% received full compensation, 8% received over half (but less than the full reduction in hours), and 6% received less than half of the reduction in hours. Furthermore, of those who lost work hours without receiving full compensation from their employers, 69% applied for Employment Insurance (EI).
Costa Dias, M., Joyce, R., Postel-Vinay, F., & Xu, X. (2020, March 25). The challenges for labour market policy during the Covid-19 pandemic. London, UK: The Institute for Fiscal Studies.
In the UK, the COVID-19 pandemic has caused a temporary but radical shift in economic activities, causing sharp declines in labour market demand in some sectors, while simultaneously creating shortages in others. The article suggests that the UK government should implement measures designed to temporarily reallocate laid-off workers to sectors with labour shortages. Additionally, the report recommends that the UK’s policy response should reduce permanent job losses and preserve existing employer–worker links, while at the same time removing any barriers to workers taking up temporary substitute jobs.
Kikuchi, L., & Khurana, I., (2020, March 24), The Jobs at Risk Index (JARI): Which occupations expose workers to COVID-19 most? London, UK: Autonomy.
This report quantifies occupational risk in the United Kingdom for 273 occupations based on workplace exposure to illness and physical proximity to people. A similar exercise is available in the New York Times for occupations in the United States.
Each occupation is scored on two indices — exposure and physical proximity — that are combined to generate a risk identification factor (RIF) value of between 0 and 100. The average RIF is 50; occupations with a RIF greater than 70 are deemed “high risk.” There are 28 high-risk occupations, 22 of which are considered “key workers” and therefore most likely to be required to continue working even during the lockdown.
A key finding of this report is that women are disproportionately represented among the high-risk occupations, specifically among workers who earn poverty wages (i.e., less than 2/3 of the median wage). Over one million high-risk jobs pay poverty wages, and 98% of these workers are women.
Muro, M., Maxim, R., & Whiton, J. (2020, March 24). The robots are ready as the COVID-19 recession spreads. Washington, DC: Brookings Institution.
As virus-related recession fears escalate, the authors discuss the potential increase and acceleration in automation that could stem from COVID-19 despite the higher unemployment in the US. The authors argue that labour becomes relatively more expensive in the wake of significant declines in firm revenue. The increased incidence of labour-replacing automation, they say, could leave certain workers more vulnerable, including youth and populations over-represented among low-skilled occupations.
Agopsowicz, A. (2020, March 20). COVID-19’s threat to Canada’s vulnerable workers. Montreal, QC/Toronto, ON: Royal Bank of Canada.
Service sector workers and new graduates are two of the groups most vulnerable to the negative economic impacts of the COVID-19 crisis, according to this report from RBC.
The service sector is expected to experience a massive collapse in demand. As a result, many workers in this sector are at high risk of losing their jobs. Furthermore, many of those in working the service sector lack the security and protection of full-time, permanent employment. In Canada, two million individuals are employed as casual and contract workers; 93% of casual workers and 85% of contractors work in the service sector.
Students and new graduates are also likely to experience losses in wages and employment. As summer approaches, student-contract workers are likely to lose the income typically earned from summer jobs. Nearly one million youth worked in seasonal or contract jobs in the summer of 2019; the outlook for the summer of 2020 is uncertain. It was also anticipated that 500,000 new graduates would join the labour force in 2020. These new graduates face the prospect of entering the job market at its weakest point, which can in turn lead to prolonged underemployment.
ILO. (2020, March 19). COVID-19 and world of work: Impact and policy responses. Geneva, Switzerland: International Labour Organization.
The COVID-19 virus will impact the world of work in terms of quantity of jobs, quality of work, and effects on vulnerable workers in the labour market. The ILO estimates a significant rise in unemployment and underemployment based on GDP growth in the wake of the virus. A decrease in wages and working hours and an increase in self-employment are also expected.
The ILO lays out several key policies to mitigate the impacts of COVID-19 on the world of work: 1) stimulate demand and protect workers and enterprises via a human-centred approach; 2) focus policy responses on health protection measures and economic support for both demand and supply; 3) monitor carefully for strong and sustained impacts, and for direct and indirect effects of all policy interventions; 4) build confidence through trust and dialogue; 5) protect workers in accordance with WHO recommendations; 6) stimulate the economy and labour demand through fiscal and monetary policies; 7) protect employment and incomes for enterprises and workers impacted by the indirect effects of COVID-19 such factory closures, disrupted supply chains, travel bans, cancellation of public events, etc.
Gopinath, G. (2020, March 18). Limiting the economic fallout of the coronavirus with large targeted policies. In R. Baldwin & B. Weder di Mauro (Eds.), Mitigating the COVID economic crisis: Act fast and do whatever it takes (pp. 41–47). London, UK: CEPR Press (Centre for Economic Policy Research).
The chapter emphasizes that the drop in manufacturing sectors because of COVID-19 is comparable to the start of the global financial crisis in 2008. However, the decline in service sectors appears larger this time. The pandemic has caused both supply and demand shocks.
On the supply side, since many firms rely on intermediate goods produced domestically or internationally, business disruptions have lowered production. On the demand side, the loss of income, fear of contagion and increased uncertainty are all sources of lower consumption.
In addition to the sectoral effects, it is expected that firms will reduce their spending and investment due to expected lower demand. In turn, this would worsen business closures and job losses. The report also provides recommendations for how the international community can help countries with limited health capacity.
Stewart, M. (2020, March 17). Canadian outlook summary: Spring 2020. Ottawa, ON: Conference Board of Canada.
With the outbreak of COVID-19, the Conference Board of Canada predicts GDP to increase by only 0.3% in 2020, and then rebound to 2.5% in 2021. It expects that approximately 138,000 jobs will be created in 2020, down from 391,000 in 2019 (a 65% decrease). Nevertheless, this decline in employment is expected to have minimal impact on wage growth, which was roughly twice the rate of inflation in 2019. While the report doesn’t expect wage growth to be as strong in 2020, wages are still expected to grow by 3.1% overall.
This outlook also highlights that the uncertainty of the COVID-19 outbreak will delay investment decisions, particularly in the energy sector. The oil price war between Russia and Saudi Arabia — with its surge in oil output, just as demand collapsed because of the COVID-19 crisis — is also hitting the energy sector. As a result, the price of oil has fallen by more than half. If this dispute is not soon resolved, the report argues that energy companies will be forced to cut production even more than anticipated, likely causing Canada to enter a recession in the third quarter of 2020.
Macdonald, D. (2020, March 16). Covid-19 and the Canadian workforce. Ottawa, ON: Canadian Centre for Policy Alternatives.
As a result of COVID-19, many workers will become unemployed and will be forced to turn to Employment Insurance (EI) to make ends meet. The report notes that policy interventions and changes made to EI during the SARS outbreak in 2003 were effective in supporting those affected by the economic fallout from that health crisis.
Drawing on this experience, the author suggests implementing the nine following changes to EI: 1) eliminate the one-week waiting period for sickness benefits; 2) increase work-sharing from 38 to 76 weeks; 3) waive the medical note requirement for sickness benefits; 4) implement an emergency EI benefit for those who would not otherwise qualify; 5) take a pro-active approach to work-sharing; 6) lower the number of hours required to 360 to qualify for benefits ; 7) broadly define “quarantine” to facilitate greater access to EI sickness benefits; 8) implement a COVID-19 hotline; and 9) exempt EI benefits for COVID-19 from counting against future EI benefits.
Note: Since this report was published, the Government of Canada has begun to make changes to EI eligibility criteria. For up-to-date information see the EI Programs page.
European Commission. (2020, March 13). Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Investment Bank and the Eurogroup: Coordinated economic response to the COVID-19 outbreak. Brussels, Belgium.
his report lays out the European Commission’s measures for ensuring the necessary healthcare supplies, alleviating the negative impact on employment, supporting the banking sector and businesses (especially small and medium-sized enterprises [SMEs]) with liquidity and providing aid to EU members.
To reduce the negative effects of the COVID-19 pandemic, the Commission will assist EU members in preventing unemployment through the EU’s structural funds, including the European Social Fund and a new Coronavirus Response Investment Initiative (CRII). Under the CRII, the Commission will fund €37 billion to support the healthcare system, provide money to SMEs hit hard by the shock, and help temporarily reduce working hours while still supporting workers’ incomes.
The Commission also proposes to incorporate the public health crisis within the scope of the EU Solidarity Fund, which will make €800 million available (it is not yet clear how these funds will be used). Furthermore, the Commission may also mobilize the European Globalization Adjustment Fund to help laid off and self-employed workers. Under this fund, an additional €179 million could be made available. The Commission is also preparing a legislative proposal for a European Unemployment Reinsurance Scheme to help workers and those who lose their jobs due to the pandemic.