Labor Market Effects of Local Spread of COVID-19

This paper explores the short-term local labor market impact of the spread of COVID-19 in the United States, using the Current Employment Statistics survey and the Current Population Survey microdata. It uses the longitudinal aspect of both these surveys to measure changes in employment for business establishments and household members. I match the survey respondent to the measured local incidence of confirmed COVID-19 cases, using confidential information on county of location, to estimate the impact of the local incidence of the virus, after controlling for multiple measures of government intervention. I find the greatest declines in employment in counties with higher incidence of COVID-19. These effects vary by industry: leisure / hospitality and other services have large declines in employment relative to the effect of the incidence of the virus, while the employment decline in construction and transportation and warehousing depends more on the local incidence of the virus. Finance / insurance, a very telework-friendly industry, is unaffected by the incidence of the virus. These short-term employment effects have implications for future employment patterns as government restrictions are relaxed and business owners begin to decide whether to open their businesses while the virus is still active in the United States.