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The long downturn: The impact of the great lockdown on formal employment


  • Hoehn-Velasco, Lauren
  • Silverio-Murillo, Adan
  • Balmori de la Miyar, Jose Roberto


In this paper, we use administrative data covering Mexico’s formal labor market to investigate the employment effects of the Great Lockdown (GL). Our results show that the COVID-19 pandemic and lockdown caused Mexico’s formal sector to contract by 5% by November of 2020. By August, men’s jobs started to recover, while women’s jobs remain stagnant. We then document heterogeneous effects by age, income, size of the firms, and economic sector activity. The most affected economic agents during the pandemic include the youngest workers (15–29- years-old), oldest workers (over 60 years old), low-income earners, small-sized firms (6−50 workers), medium-sized firms (51−250 workers), workers in the construction industry, and the hospitality-focused service sectors. Finally, we test different state-level factors that may explain heterogeneity within Mexico: state-level reopenings and lockdowns, infection risk, and stimulus payments. Our findings suggest more considerable employment losses in states that experienced successive lockdowns.

Suggested Citation

  • Hoehn-Velasco, Lauren & Silverio-Murillo, Adan & Balmori de la Miyar, Jose Roberto, 2021. "The long downturn: The impact of the great lockdown on formal employment," Journal of Economics and Business, Elsevier, vol. 115(C).
  • Handle: RePEc:eee:jebusi:v:115:y:2021:i:c:s0148619521000011
    DOI: 10.1016/j.jeconbus.2021.105983

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    2. Jose Carlos Saavedra & Pablo Lavado & Sebastián Lindley & Liz Villegas, 2021. "Impacto de las medidas para la mitigación de la Covid - 19 en la Salud y en la Economía para Latinoamérica y Perú," Working Papers 181, Peruvian Economic Association.
    3. Wolter H. J. Hassink & Guyonne Kalb & Jordy Meekes, 2021. "Regional Coronavirus Hotspots During the COVID-19 Outbreak in the Netherlands," De Economist, Springer, vol. 169(2), pages 127-140, May.
    4. Lara Bellotti & Sara Zaniboni & Cristian Balducci & Gudela Grote, 2021. "Rapid Review on COVID-19, Work-Related Aspects, and Age Differences," IJERPH, MDPI, vol. 18(10), pages 1-24, May.
    5. Egana-delSol, Pablo & Cruz, Gabriel & Micco, Alejandro, 2022. "COVID-19 and automation in a developing economy: Evidence from Chile," Technological Forecasting and Social Change, Elsevier, vol. 176(C).
    6. Minoru Higa & Carlos Ospino & Fernando Aragon, 2021. "The persistent effects of COVID-19 on labor outcomes: evidence from Peru," Discussion Papers dp21-10, Department of Economics, Simon Fraser University.
    7. Qi Zhang & Xinxin Zhang & Qi Cui & Weining Cao & Ling He & Yexin Zhou & Xiaofan Li & Yunpeng Fan, 2022. "The Unequal Effect of the COVID-19 Pandemic on the Labour Market and Income Inequality in China: A Multisectoral CGE Model Analysis Coupled with a Micro-Simulation Approach," IJERPH, MDPI, vol. 19(3), pages 1-21, January.

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    More about this item


    COVID-19; Labor; Latin America; Mexico;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search


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