The COVID-19 pandemic and unemployment: Evidence from mobile phone data from China

Based on mobile phone records for 71 million users and location tracking information for one million users over almost three years, this study examines the labor market impacts of the COVID-19 pandemic in China’s Guangdong province, whose GDP is larger than that of all but the top 12 countries in the world. Using a standard difference-in-differences framework, our analysis shows dramatic and protracted effects of the pandemic on the labor market: it increased unemployment by 72% and unemployment benefits claims by 57% even after the full reopening in 2020 relative to their levels in the same period in 2019. The impact was also highly heterogeneous, with women, workers older than 40, and migrants being more affected. Cities that rely more on export or that have a higher share of the hospitality industry in GDP but a lower share of the finance and healthcare industries experienced a more pronounced increase in unemployment. The lingering impact likely reflects the global transmission of the pandemic’s effects through the supply chain and trade channels.