Determinants of Disparities in Early COVID-19 Job Losses

Abstract

This study examines the sociodemographic divide in early labor market responses to the U.S. COVID-19 epidemic and associated policies, benchmarked against two previous recessions. Monthly Current Population Survey (CPS) data show greater declines in employment in April and May 2020 (relative to February) for Hispanic individuals, younger workers, and those with a high school diploma or some college. Between April and May, the demographic subgroups considered regained some employment. Reemployment in May was broadly proportional to the employment drop that occurred through April, except for Black individuals, who experienced a smaller rebound. Compared to the 2001 recession and the Great Recession, employment losses in the early COVID-19 recession were smaller for groups with low or high (vs. medium) education. We show that job loss was greater in occupations that require more interpersonal contact and that cannot be performed remotely, and that pre-COVID-19 sorting of workers into occupations and industries along demographic lines can explain a sizable portion of the demographic gaps in new unemployment. For example, while women suffered more job losses than men, their disproportionate pre-epidemic sorting into occupations compatible with remote work shielded them from even larger employment losses. However, substantial gaps in employment losses across groups cannot be explained by socioeconomic differences. We consider policy lessons and future research needs regarding the early labor market implications of the COVID-19 crisis.

COVID-19 and layoffs in US start-ups

“…To the best of our knowledge, only one study incorporates workers' industry as a factor that can explain differences in the labor market impact of COVID-19. Indeed, Montenovo et al (2022) analyze the factors that explain the unequal distribution of job losses during the COVID-19 crisis. They use the technique of decomposing the population into the different factors that may promote job loss and CPS data.…”

“…Unlike Montenovo et al (2022) who focus on core and non-core industries according to the nomenclature of public authorities, we focus our analysis on layoffs in Start-ups in the United States of America (USA) according to the branches of activity. This methodological approach allows us to have a microeconomic overview of the effects of the health crisis in a category of companies that are at the forefront of innovation, that provide jobs in normal times and that are currently booming in the world.…”

“…This initial literature has therefore listed various socioeconomic and geographic channels that allow for analysis of the differential effect of the crisis on the labor market, with the aim of better informing policymakers on appropriate economic and social policy measures. However, although the importance of the type of industry is taken into account (Montenovo et al 2022), the impact of the COVID-19 health shock on layoffs in start-ups and according to the branches of activity remains under studied in this literature. However, Gourinchas (2020) emphasizes the need to take into account the interconnectedness of different rms, nancial markets, employees and many other actors, when analyzing the impact of a negative shock on the economy.…”

“…Because of their low level of quali cation, they are generally employed in precarious jobs that cannot be telecommuted and constitute the bulk of the unskilled labor force. Yet, according to Montenovo et al (2022), only populations employed in core industries have been more resilient to unemployment. Geographically, Antipova (2021) explains the ampli cation of unemployment rate differentials by the economic marginalization of certain cities.…”

Job Motivation, Burnout and Turnover Intention during the COVID-19 Pandemic: Are There Differences between Female and Male Workers?

“…Their findings showed that, overall, women performed more office work at home than men. Therefore, the studies carried out during the pandemic suggest that the impact of COVID-19 on market labor conditions was greater on female than male workers [ 27 ]. Theoretically, it is shown in previous studies [ 28 ] that a shock affecting labor market may cause an impact on gender roles and force attitudes to be adapted to the prevailing circumstances.…”