Measuring Labor Supply and Demand Shocks during COVID-19
Measuring Labor Supply and Demand Shocks during COVID-19
We measure labor demand and supply shocks at the sector level around the COVID-19 outbreak by estimating a Bayesian structural vector autoregression on monthly statistics of hours worked and real wages. Most sectors were subject to large negative labor supply and demand shocks in March and April 2020, with substantial heterogeneity in the size of shocks across sectors. Our estimates suggest that two-thirds of the drop in the aggregate growth rate of hours in March and April 2020 are attributable to labor supply. We validate our estimates of supply shocks by showing that they are correlated with sectoral measures of telework.
Authors:Pedro Brinca, Joao B. Duarte, Miguel Faria-e-Castro
About Authors
João Duarte
João Duarte is an Assistant Professor at Nova School of Business and Economics in Lisbon. He received his Ph.D. in Economics from University of Illinois at Urbana-Champaign. Before joining NovaSBE, Joao was a research associate at the University of Cambridge.
Pedro Brinca
Pedro Brinca currently holds a position as an Assistant Professor (tenure-track) at NovaSBE and teaches Macroeconomics in the BSc’s in Economics and Business Administration. (...)