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Intensity of labor shocks behind the changes in Brazilian hours worked during the pandemic

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  • da Silva, Nelson
  • Caetano, Sidney

Abstract

COVID-19 has impacted the labor market in multiple ways, including by reducing the number of hours effectively worked. A study on the US economy found that two-thirds of the drop in the aggregate growth rate of hours worked was due to a labor supply shock. This paper quantifies the role of labor supply and labor demand shocks in Brazil’s labor market behavior during the COVID-19 period by estimating a Bayesian Structural Vector Autoregression (BVAR) with sign restrictions on the slopes of the labor supply and labor demand curves. Our results show that labor demand shocks were more important than labor supply shocks in explaining the decline in hours effectively worked. The prominence of labor demand shocks in Brazil is an exciting result that demonstrates the heterogeneous impacts of similar shocks on high- and middle-income economies.

Suggested Citation

  • da Silva, Nelson & Caetano, Sidney, 2024. "Intensity of labor shocks behind the changes in Brazilian hours worked during the pandemic," Economic Modelling, Elsevier, vol. 131(C).
    • Handle: RePEc:eee:ecmode:v:131:y:2024:i:c:s0264999323004352
    DOI: 10.1016/j.econmod.2023.106623
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    More about this item

    Keywords

    Labor market; Covid-19; Bayesian SVAR; Structural shocks;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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