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Short-Term Impact of COVID-19 on Consumption and Labor Market Outcomes: Evidence from Singapore

Author

Listed:
  • Kim, Seonghoon

    (Singapore Management University)

  • Koh, Kanghyock

    (Korea University)

  • Zhang, Xuan

    (Goethe University Frankfurt)

Abstract

We examine the short-term impact of COVID-19 on consumption spending and labor market outcomes. Using monthly panel data of individuals mainly aged 50–70 in Singapore, we find that COVID-19 reduced consumption spending and labor market outcomes immediately after its outbreak, and its negative impact quickly evolved. At its peak, the pandemic reduced total household consumption spending by 22.8% and labor income by 5.9% in April. Probability of full-time work also went down by 1.2 pp and 6.0 pp in April and May, respectively, but employment and self-employment were only mildly affected. Our heterogeneity analysis indicates that the reduction in consumption spending was greater among those with higher net worth, while the decreases in labor market outcomes were greater among those with lower net worth. However, we find little evidence that those in worse health status experienced larger reductions in consumption spending and labor market outcomes. Reductions in consumption spending correlated with increased risk avoidance behavior, the nationwide partial lockdown, worsening economic outlook, and reduced income.

Suggested Citation

  • Kim, Seonghoon & Koh, Kanghyock & Zhang, Xuan, 2020. "Short-Term Impact of COVID-19 on Consumption and Labor Market Outcomes: Evidence from Singapore," IZA Discussion Papers 13354, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13354
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    8. Scott R Baker & Robert A Farrokhnia & Steffen Meyer & Michaela Pagel & Constantine Yannelis & Jeffrey Pontiff, 0. "How Does Household Spending Respond to an Epidemic? Consumption during the 2020 COVID-19 Pandemic," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 10(4), pages 834-862.
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    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Economic consequences > Consumption

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    Cited by:

    1. Barbara Baarsma & Jesse Groenewegen, 2021. "COVID-19 and the Demand for Online Grocery Shopping: Empirical Evidence from the Netherlands," De Economist, Springer, vol. 169(4), pages 407-421, November.
    2. Cheng, Terence Chai & Kim, Seonghoon & Koh, Kanghyock, 2020. "The Impact of COVID-19 on Subjective Well-Being: Evidence from Singapore," IZA Discussion Papers 13702, Institute of Labor Economics (IZA).
    3. Shin, Jinwook & Kim, Seonghoon & Koh, Kanghyock, 2020. "Economic Impact of Targeted Government Responses to COVID-19: Evidence from the First Large-scale Cluster in Seoul," IZA Discussion Papers 13575, Institute of Labor Economics (IZA).
    4. Ahn, SangNam & Kim, Seonghoon & Koh, Kanghyock, 2020. "Changes in Healthcare Utilization, Spending, and Perceived Health during COVID–19: A Longitudinal Study from Singapore," IZA Discussion Papers 13715, Institute of Labor Economics (IZA).
    5. Janssen, Aljoscha & Shapiro, Matthew, 2020. "Does Precise Case Information Limit Precautionary Behavior? Evidence from COVID-19 in Singapore," Working Paper Series 1344, Research Institute of Industrial Economics.

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    More about this item

    Keywords

    COVID-19; pandemic; consumption spending; labor market; monthly panel data;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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