Working Paper: NBER ID: w30387
Authors: Eliza Forsythe; Lisa B. Kahn; Fabian Lange; David G. Wiczer
Abstract: At the onset of the COVID pandemic, the U.S. economy suddenly and swiftly lost 20 million jobs. Over the next two years, the economy has been on the recovery path. We assess the labor market two years into the COVID crisis. We show that early employment dynamics were almost entirely driven by temporary layoffs and later recalls. Taking these into account, we show that the labor market remained surprisingly tight throughout the crisis, despite the dramatic job losses. By spring, 2022, the labor market had largely recovered and was characterized by extremely tight markets and a slightly depressed employment-to-population ratio driven largely by retirements. Finally, we see surprisingly little evidence of excess reallocation, despite predictions that COVID would dramatically and permanently change the way we live and work. We do see that employment has reallocated somewhat away from low-skilled service jobs, and, in light of the job vacancy patterns, conclude that worker preferences or changes in job amenities are driving this shift. In addition, the retirements paved the way for movements up the job ladder, making low-skilled customer-facing jobs even less desirable.
Keywords: No keywords provided
JEL Codes: E24; E32; J21; J23; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| temporary layoffs (J63) | recalls (D18) |
| temporary layoffs (J63) | employment recovery (J68) |
| COVID shock (H12) | labor market tightness (J20) |
| temporary layoffs (J63) | labor market tightness (J20) |
| retirements (J26) | employment-to-population ratio (J68) |
| retirements (J26) | upward mobility for lower-skilled workers (J62) |
| changes in worker preferences (J29) | shifts in employment away from low-skilled service jobs (J68) |
| little evidence of excess reallocation (D61) | stable employment composition (J63) |