Covid-19—Pandemics and the labor market
We are facing unprecedented times as the coronavirus—or “Covid-19,” the disease associated with the virus—pandemic sweeps the globe. In the short term this means extreme disruption for citizens and labor markets as countries impose travel restrictions and nationwide lockdowns to slow the spread of the virus and prevent it from overwhelming health services. Governments are having to find extraordinary ways to protect workers and their economies from financial hardship and potential collapse. Recession would appear to be inevitable. Citizens themselves are also experiencing exceptional limits on their movements, which could have overwhelming effects on their health and well-being. But the full effects of the crisis are as yet unknown and may take many years of analysis before they are fully understood.
IZA Discussion Papers:
IZA publishes a series of Discussion Papers on Covid-19. Here is a selection of the latest:
- Compulsory Class Attendance versus Autonomy, by Sofoklis Goulas, Silvia Griselda, Rigissa Megalokonomou
- Can a Supranational Medicines Agency Restore Trust After Vaccine Suspensions? The Case of Vaxzevria, by Andrea Albanese, Francesco Fallucchi, Bertrand Verheyden
- The Impact of COVID-19 on Economic Activity: Evidence from Administrative Tax Registers, by Nikolay Angelov, Daniel Waldenström
- COVID-19 and Income Inequality: Evidence from Monthly Population Registers, by Nikolay Angelov, Daniel Waldenström
- Chutes and Ladders? Job Opportunities for Generation COVID, by Erling Barth, Harald Dale-Olsen, Pal Schone, Kjersti Misje Ostbakken
Visit IZA's COVID-19 and the Labor Market site for further content on the pandemic.
See National responses to Covid-19 for a compilation of content looking at the effects of the pandemic on individual countries or cities.
IZA World of Labor content:
Health effects of job insecurity Updated
Job insecurity adversely affects health, but employability policies and otherwise better job quality can mitigate the effectsFrancis Green, December 2020The fear of unemployment has increased around the world in the wake of Covid-19. Research has shown that job insecurity affects both mental and physical health, though the effects are lower when employees are easily re-employable. The detrimental effects of job insecurity could be partly mitigated if employers improved other aspects of job quality that support better health. But as job insecurity is felt by many more people than just the unemployed, the negative health effects during recessions are multiplied and extend through the majority of the population. This reinforces the need for effective, stabilising macroeconomic policies, most especially at this time of pandemic.MoreLess
Temporary government schemes can have a positive economic effectPierre Cahuc, May 2019Government schemes that compensate workers for the loss of income while they are on short hours (known as short-time work compensation schemes) make it easier for employers to temporarily reduce hours worked so that labor is better matched to output requirements. Because the employers do not lay off these staff, the schemes help to maintain permanent employment levels during recessions. However, they can create inefficiency in the labor market, and might limit labor market access for freelancers and those looking to work part-time.MoreLess
Jobs can change quickly from full- to part-time status, especially during economic downturnsDaniel Borowczyk-Martins, October 2017The share of workers employed part-time increases substantially in economic downturns. How should this phenomenon be interpreted? One hypothesis is that part-time jobs are more prevalent in sectors that are less sensitive to the business cycle, so that recessionary changes in the sectoral composition of employment explain the increase in part-time employment. The evidence shows, however, that this hypothesis only accounts for a small part of the story. Instead, the growth of part-time work operates mainly through reductions in working hours in existing jobs.MoreLess
Penalties may last ten years or more, especially for high-educated youth and in rigid labor marketsBart Cockx, August 2016The Great Recession that began in 2008–2009 dramatically increased youth unemployment. But did it have long-lasting, adverse effects on the careers of youths? Are cohorts that graduate during a recession doomed to fall permanently behind those that graduate at other times? Are the impacts different for low- and high-educated individuals? If recessions impose penalties that persist over time, then more government outlays are justified to stabilize economic activity. Scientific evidence from a variety of countries shows that rigid labor markets can reinforce the persistence of these setbacks, which has important policy implications.MoreLess
Economic recessions seem to reduce overall mortality rates, but increase suicides and mental health problemsNick Drydakis, August 2016Recessions are complex events that affect personal health and behavior via various potentially opposing mechanisms. While recessions are known to have negative effects on mental health and lead to an increase in suicides, it has been proven that they reduce mortality rates. A general health policy agenda in relation to recessions remains ambiguous due to the lack of consistency between different individual- and country-level approaches. However, aggregate regional patterns provide valuable information, and local social planners could use them to design region-specific policy responses to mitigate the negative health effects cause by recessions.MoreLess
Recent declines in youth employment, net worth, and family formation could permanently affect financial well-beingLisa Dettling, April 2016Current cohorts of young adults entered adulthood during an international labor and housing market crisis of a severity not experienced since the Great Depression. Concerns have arisen over the impacts on young adults’ employment, income, wealth, and living arrangements, and about whether these young adults constitute a “scarred generation” that will suffer permanent contractions in financial well-being. If true, knowing the mechanisms through which young adults’ finances have been affected has important implications for policy measures that could improve the financial well-being of today’s young adults in the present and future.MoreLess