Twin Peaks: Covid-19 and the labor market

Abstract

This paper develops a choice-theoretic equilibrium model of the labor market in the presence of a pandemic. It includes heterogeneity in productivity, age and the ability to work from home. Worker and firm behavior changes in the presence of the virus, which itself has equilibrium consequences for the infection rate. The model is calibrated to the UK and counterfactual lockdown measures are evaluated. We find a different response in both the evolution of the virus and the labor market with different lockdown policies. A laissez-faire approach results in lives lost and acts as negative shock to the economy. A lockdown policy, absent any other intervention, will reduce the lives lost but increase the economic burden. Consistent with recent evidence, we find that the economic costs from lockdown are most felt by those earning the least. Finally, we introduce a job retention scheme as implemented by the UK Government and find that it spreads the economic hardship more equitably.

Remote work and the COVID-19 pandemic: An artificial intelligence-based topic modeling and a future agenda

“…Some researchers argue that COVID-19-induced remote work has significantly altered a large number of jobs, most of which now require the use of digital technologies to collaborate with geographically dispersed team members ( Waizenegger et al, 2020 ). Ultimately, the majority of existing research has emphasized the negative consequences of pandemic-induced remote work by examining job losses ( Bradley et al, 2021 , Hadjisolomou et al, 2021 ).…”

“…More specifically, job losses have been high for jobs that cannot be performed remotely ( Zimpelmann et al, 2021 ). Therefore, individuals who work in low-skilled, non-essential jobs or occupations that cannot be performed from home are at higher risk of having their employment terminated ( Adams-Prassl et al, 2020 , Lopes and Carreira, 2021 , Bradley et al, 2021 ). Some studies show that the aforementioned issues relate to the level of available technological infrastructure needed to perform a job remotely.…”

“…This sub-stream of literature needs a thorough understanding of the role that governments, public institutions, organizations, and individuals play in ensuring labor markets remain resilient during crises. For example, governments could create new positions while ensuring the performance of current jobs ( Adams-Prassl et al, 2020 , Lopes and Carreira, 2021 , Bradley et al, 2021 ) by providing appropriate digital infrastructure and formulating supportive policies (Holgersen et al, 2021). Governments and their associated public institutions are also vital for newer placements or the re-skilling of many workers who have lost their jobs over the widespread transition to remote work.…”

Do COVID-19 containment measures work? Evidence from Switzerland

“…Bradley et al. ( 2021 ) calibrate an equilibrium model for the labor market in the presence of a pandemic in the UK and find that a laissez-faire approach implicate a higher death toll while total employment experiences a drop. The latter is, however, less pronounced than under a lockdown policy.…”

Effect of COVID-19 lockdowns on city-center and suburban housing markets: Evidence from Hangzhou, China

“…Several studies have investigated the effect of COVID-19 lockdowns. Bradley et al (2020) establish a choice theory–based equilibrium model for labor markets during a pandemic that comprises variables such as the heterogeneity of productivity, age, and ability to work at home. According to the model, the spread of pandemics and lockdowns affect labor markets considerably; the duration of lockdowns affects workers’ decisions to work from home and the number of job openings in companies.…”