IDEAS home Printed from https://ideas.repec.org/a/eee/labeco/v79y2022ics0927537122001658.html
   My bibliography  Save this article

Has the Willingness to Work Fallen during the Covid Pandemic?

Author

Listed:
  • Faberman, R. Jason
  • Mueller, Andreas I.
  • Şahin, Ayşegül

Abstract

We examine the effect of the Covid pandemic on willingness to work along both the extensive and intensive margins of labor supply. Special survey questions in the Job Search Supplement of the Survey of Consumer Expectations (SCE) allow us to elicit information about individuals’ desired work hours for the 2013–2021 period. Using these questions, along with workers’ actual labor market participation, we construct a labor market underutilization measure, the Aggregate Hours Gap (AHG), following Faberman et al. (2020). The AHG captures changes in labor market underutilization for the full population along both the extensive and intensive margins using data on desired work hours as a measure of their potential labor supply. We find that a sharp increase in the AHG during the Covid pandemic essentially disappeared by the end of 2021. We also document a sharp decline in desired work hours during the pandemic that persists through the end of 2021 and is roughly double the drop in the labor force participation rate. Ignoring the decline in desired hours overstates the degree of underutilization by 2.5 percentage points (12.5%). Our findings suggest that, through 2021Q4, the labor market was tighter than suggested by the unemployment rate and the adverse labor supply effect of the pandemic was more pronounced than implied by the labor force participation rate. These discrepancies underscore the importance of taking into account the intensive margin for both labor market underutilization and potential labor supply.

Suggested Citation

  • Faberman, R. Jason & Mueller, Andreas I. & Şahin, Ayşegül, 2022. "Has the Willingness to Work Fallen during the Covid Pandemic?," Labour Economics, Elsevier, vol. 79(C).
  • Handle: RePEc:eee:labeco:v:79:y:2022:i:c:s0927537122001658
    DOI: 10.1016/j.labeco.2022.102275
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927537122001658
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.labeco.2022.102275?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Marinescu, Ioana & Skandalis, Daphné & Zhao, Daniel, 2021. "The impact of the Federal Pandemic Unemployment Compensation on job search and vacancy creation," Journal of Public Economics, Elsevier, vol. 200(C).
    2. Barrero, Jose Maria & Bloom, Nick & Davis, Steven J., 2020. "Why Working From Home Will Stick," SocArXiv wfdbe, Center for Open Science.
    3. Jun Nie & Shu-Kuei X. Yang, 2021. "What Has Driven the Recent Increase in Retirements?," Economic Bulletin, Federal Reserve Bank of Kansas City, issue August 11, pages 1-4, August.
    4. Simon Mongey & Laura Pilossoph & Alexander Weinberg, 2021. "Which workers bear the burden of social distancing?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 509-526, September.
    5. Bart Hobijn & Ayşegül Şahin, 2021. "Maximum Employment and the Participation Cycle," NBER Working Papers 29222, National Bureau of Economic Research, Inc.
    6. R. Jason Faberman & Andreas I. Mueller & Ayşegül Şahin & Giorgio Topa, 2022. "Job Search Behavior Among the Employed and Non‐Employed," Econometrica, Econometric Society, vol. 90(4), pages 1743-1779, July.
    7. Régis Barnichon & Winnie Yee, 2020. "Adjusting the Unemployment Thermometer," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2020(27), pages 01-05, September.
    8. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    9. Regis Barnichon & Andrew Figura, 2016. "Declining Desire to Work and Downward Trends in Unemployment and Participation," NBER Macroeconomics Annual, University of Chicago Press, vol. 30(1), pages 449-494.
    10. Ayşegül Şahin & Murat Tasci & Jin Yan, 2021. "Unemployment in the Time of COVID-19: A Flow-Based Approach to Real-time Unemployment Projections," Working Papers 21-25, Federal Reserve Bank of Cleveland.
    11. R. Jason Faberman & Andreas I. Mueller & Ayşegül Şahin* & Giorgio Topa, 2020. "The Shadow Margins of Labor Market Slack," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(S2), pages 355-391, December.
    12. Eliza Forsythe & Lisa B. Kahn & Fabian Lange & David G. Wiczer, 2020. "Searching, Recalls, and Tightness: An Interim Report on the COVID Labor Market," NBER Working Papers 28083, National Bureau of Economic Research, Inc.
    13. Ganong, Peter & Noel, Pascal & Vavra, Joseph, 2020. "US unemployment insurance replacement rates during the pandemic," Journal of Public Economics, Elsevier, vol. 191(C).
    14. Tomaz Cajner & Leland D. Crane & Ryan A. Decker & John Grigsby & Adrian Hamins-Puertolas & Erik Hurst & Christopher Johann Kurz & Ahu Yildirmaz, 2020. "The U.S. Labor Market During the Beginning of the Pandemic Recession," Working Papers 2020-58_Revision, Becker Friedman Institute for Research In Economics.
    15. Richard K. Crump & Stefano Eusepi & Marc Giannoni & Ayşegül Şahin, 2022. "The Unemployment-Inflation Trade-off Revisited: The Phillips Curve in COVID Times," NBER Working Papers 29785, National Bureau of Economic Research, Inc.
    16. Goolsbee, Austan & Syverson, Chad, 2021. "Fear, lockdown, and diversion: Comparing drivers of pandemic economic decline 2020," Journal of Public Economics, Elsevier, vol. 193(C).
    17. Alon, Titan & Doepke, Matthias & Olmstead-Rumsey, Jane & Tertilt, Michèle, 2020. "This Time It's Different: The Role of Women's Employment in a Pandemic Recession," IZA Discussion Papers 13562, Institute of Labor Economics (IZA).
    18. Alexander W. Bartik & Marianne Bertrand & Feng Lin & Jesse Rothstein & Matthew Unrath, 2020. "Measuring the Labor Market at the Onset of the COVID-19 Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 239-268;316.
    19. Tertilt, Michèle & Doepke, Matthias & Olmstead-Rumsey, Jane, 2020. "This Time It’s Different: The Role of Women’s Employment in a Pandemic Recession," CEPR Discussion Papers 15149, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Robert A. Hart, 2023. "Hours vs employment in response to demand shocks," IZA World of Labor, Institute of Labor Economics (IZA), pages 393-393, February.
    2. Jose Maria Barrero & Nicholas Bloom & Steven J. Davis, 2023. "Long Social Distancing," Journal of Labor Economics, University of Chicago Press, vol. 41(S1), pages 129-172.
    3. Dain Lee & Jinhyeok Park & Yongseok Shin, 2024. "Where Are the Workers? From Great Resignation to Quiet Quitting," Review, Federal Reserve Bank of St. Louis, vol. 106(1), pages 59-71, January.
    4. Kyle Boutilier & Thomas J. Carter & Xin Scott Chen & Eshini Ekanayake & Louis Poirier & Peter Shannon & Akash Uppal & Lin Xiang, 2022. "Assessing global potential output growth and the US neutral rate: April 2022," Staff Analytical Notes 2022-4, Bank of Canada.
    5. Forsythe, Eliza & Kahn, Lisa B. & Lange, Fabian & Wiczer, David, 2022. "Where have all the workers gone? Recalls, retirements, and reallocation in the COVID recovery," Labour Economics, Elsevier, vol. 78(C).
    6. Oleksiy Kryvtsov & James (Jim) C. MacGee & Luis Uzeda, 2023. "The 2021–22 Surge in Inflation," Discussion Papers 2023-3, Bank of Canada.
    7. Beckmannshagen, Mattis & Schröder, Carsten, 2022. "Earnings inequality and working hours mismatch," Labour Economics, Elsevier, vol. 76(C).
    8. Cavallo, Alberto & Kryvtsov, Oleksiy, 2023. "What can stockouts tell us about inflation? Evidence from online micro data," Journal of International Economics, Elsevier, vol. 146(C).
    9. Mary Amiti & Sebastian Heise & Fatih Karahan & Ayşegül Şahin, 2023. "Inflation Strikes Back: The Role of Import Competition and the Labor Market," NBER Chapters, in: NBER Macroeconomics Annual 2023, volume 38, National Bureau of Economic Research, Inc.
    10. William D. Craighead, 2022. "Pandemic Preference Shocks and Inflation in a New Keynesian Model," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 50(3), pages 133-146, December.
    11. Takushi Kurozumi & Willem Van Zandweghe, 2022. "Labor Supply Shocks, Labor Force Entry, and Monetary Policy," Working Papers 22-17, Federal Reserve Bank of Cleveland, revised 15 Aug 2020.
    12. Takushi Kurozumi & Willem Van Zandweghe, 2022. "How Should Monetary Policy Respond to a Contraction in Labor Supply?," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2022(13), pages 1-5, September.
    13. Joseph Richardson, 2023. "Health Risks and Labour Supply," Working Papers 379420583, Lancaster University Management School, Economics Department.
    14. Carrillo-Tudela, Carlos & Clymo, Alex & Comunello, Camila & Jäckle, Annette & Visschers, Ludo & Zentler-Munro, David, 2023. "Search and reallocation in the COVID-19 pandemic: Evidence from the UK," Labour Economics, Elsevier, vol. 81(C).
    15. Richard K. Crump & Stefano Eusepi & Marc Giannoni & Ayşegül Şahin, 2022. "The Unemployment-Inflation Trade-off Revisited: The Phillips Curve in COVID Times," NBER Working Papers 29785, National Bureau of Economic Research, Inc.
    16. Sargent, Kristina, 2023. "The labor market impacts of Brexit: Migration and the European union," Economic Modelling, Elsevier, vol. 121(C).
    17. Robert Bernhardt & David Munro & Erin L. Wolcott, 2024. "How does the dramatic rise of nonresponse in the Current Population Survey impact labor market indicators?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(3), pages 498-512, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guido Matias Cortes & Eliza Forsythe, 2023. "Distributional impacts of the Covid-19 pandemic and the CARES Act," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(2), pages 325-349, June.
    2. Forsythe, Eliza & Kahn, Lisa B. & Lange, Fabian & Wiczer, David, 2022. "Where have all the workers gone? Recalls, retirements, and reallocation in the COVID recovery," Labour Economics, Elsevier, vol. 78(C).
    3. Brad J. Hershbein & Harry J. Holzer, 2021. "The COVID-19 Pandemic's Evolving Impacts on the Labor Market: Who's Been Hurt and What We Should Do," Upjohn Working Papers 21-341, W.E. Upjohn Institute for Employment Research.
    4. Cortes, Guido Matias & Forsythe, Eliza, 2020. "Impacts of the COVID-19 Pandemic and the CARES Act on Earnings and Inequality," IZA Discussion Papers 13643, Institute of Labor Economics (IZA).
    5. Bart Hobijn & Ayşegül Şahin, 2021. "Maximum Employment and the Participation Cycle," NBER Working Papers 29222, National Bureau of Economic Research, Inc.
    6. Couch, Kenneth A. & Fairlie, Robert W. & Xu, Huanan, 2020. "Early evidence of the impacts of COVID-19 on minority unemployment," Journal of Public Economics, Elsevier, vol. 192(C).
    7. Kouki, Amairisa, 2023. "Beyond the “Comforts” of work from home: Child health and the female wage penalty," European Economic Review, Elsevier, vol. 157(C).
    8. Bergeaud, Antonin & Eyméoud, Jean-Benoît & Garcia, Thomas & Henricot, Dorian, 2023. "Working from home and corporate real estate," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    9. Blanas, Sotiris & Oikonomou, Rigas, 2023. "COVID-induced economic uncertainty, tasks and occupational demand," Labour Economics, Elsevier, vol. 81(C).
    10. Nicola Pierri & Yannick Timmer, 2020. "IT Shields: Technology Adoption and Economic Resilience during the Covid-19 Pandemic," CESifo Working Paper Series 8720, CESifo.
    11. Seung Jin Cho & Jun Yeong Lee & John V. Winters, 2021. "Employment impacts of the COVID‐19 pandemic across metropolitan status and size," Growth and Change, Wiley Blackwell, vol. 52(4), pages 1958-1996, December.
    12. Larrimore, Jeff & Mortenson, Jacob & Splinter, David, 2023. "Earnings business cycles: The Covid recession, recovery, and policy response," Journal of Public Economics, Elsevier, vol. 225(C).
    13. Antonin Bergeaud & Jean-Benoît Eymeoud & Thomas Garcia & Dorian Henricot, 2022. "Working From Home and Corporate Real Estate," Post-Print hal-03548889, HAL.
    14. Taiyo Fukai & Hidehiko Ichimura & Keisuke Kawata, 2021. "Describing the impacts of COVID-19 on the labor market in Japan until June 2020," The Japanese Economic Review, Springer, vol. 72(3), pages 439-470, July.
    15. Marinescu, Ioana & Skandalis, Daphné & Zhao, Daniel, 2021. "The impact of the Federal Pandemic Unemployment Compensation on job search and vacancy creation," Journal of Public Economics, Elsevier, vol. 200(C).
    16. Juan C. Palomino & Juan G. Rodríguez & Raquel Sebastian, 2023. "The COVID-19 shock on the labour market: poverty and inequality effects across Spanish regions," Regional Studies, Taylor & Francis Journals, vol. 57(5), pages 814-828, May.
    17. Barrero, Jose Maria & Bloom, Nick & Davis, Steven J., 2020. "Why Working From Home Will Stick," SocArXiv wfdbe, Center for Open Science.
    18. Nicholas Bloom & Philip Bunn & Paul Mizen & Pawel Smietanka & Gregory Thwaites, 2020. "The Impact of Covid-19 on Productivity," NBER Working Papers 28233, National Bureau of Economic Research, Inc.
    19. Larrimore, Jeff & Mortenson, Jacob & Splinter, David, 2022. "Earnings shocks and stabilization during COVID-19," Journal of Public Economics, Elsevier, vol. 206(C).
    20. Julia Darby & Stuart McIntyre & Graeme Roy, 2022. "What can analysis of 47 million job advertisements tell us about how opportunities for homeworking are evolving in the United Kingdom?," Industrial Relations Journal, Wiley Blackwell, vol. 53(4), pages 281-302, July.

    More about this item

    Keywords

    Labor market slack; Covid pandemic; Desired work hours; Potential labor supply;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:79:y:2022:i:c:s0927537122001658. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/labeco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.