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Will the Covid-19 pandemic lead to job reallocation and persistent unemployment?

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Abstract

The Covid-19 pandemic has had an enormous impact on the U.S. economy. Nowhere are the effects more dramatic than in the labor market: In a span of just two months, the unemployment rate increased from 3.5% in February 2020—a low not seen since the late 1960s—to 14.7% in April—a high not seen since the Great Depression—before falling modestly in May and June. How persistent are these effects likely to be? Will the labor market recover quickly once pandemic-related restrictions are fully lifted, or will unemployment remain at elevated levels further into the future?

Suggested Citation

  • Joel M. David, 2020. "Will the Covid-19 pandemic lead to job reallocation and persistent unemployment?," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue 444, pages 1-6, August.
    • Handle: RePEc:fip:fedhle:92396
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    Cited by:

    1. Mr. Geoffrey J Bannister & Mr. Harald Finger & Siddharth Kothari & Ms. Elena Loukoianova, 2020. "Addressing the Pandemic's Medium-Term Fallout in Australia and New Zealand," IMF Working Papers 2020/272, International Monetary Fund.

    More about this item

    Keywords

    Reallocation; unemployment; stock return dispersion; Covid-19; Employment;
    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
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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