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Effects of social distancing policy on labor market outcomes

Author

Listed:
  • Sumedha Gupta
  • Laura Montenovo
  • Thuy Nguyen
  • Felipe Lozano‐Rojas
  • Ian Schmutte
  • Kosali Simon
  • Bruce A. Weinberg
  • Coady Wing

Abstract

US workers receive unemployment benefits if they lose their job, but not for reduced working hours. In alignment with the benefits incentives, we find that the labor market responded to COVID‐19 and related closure‐policies mostly on the extensive (12 pp outright job loss) margin. Exploiting timing variation in state closure‐policies, difference‐in‐differences (DiD) estimates show, between March 12 and April 12, 2020, employment rate fell by 1.7 pp for every 10 extra days of state stay‐at‐home orders (SAH), with little effect on hours worked/earnings among those employed. Forty percentage of the unemployment was due to a nationwide shock, rest due to social‐distancing policies, particularly among “non‐essential” workers.

Suggested Citation

  • Sumedha Gupta & Laura Montenovo & Thuy Nguyen & Felipe Lozano‐Rojas & Ian Schmutte & Kosali Simon & Bruce A. Weinberg & Coady Wing, 2023. "Effects of social distancing policy on labor market outcomes," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 166-193, January.
  • Handle: RePEc:bla:coecpo:v:41:y:2023:i:1:p:166-193
    DOI: 10.1111/coep.12582
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    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J1 - Labor and Demographic Economics - - Demographic Economics

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