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COVID-19 Is a Persistent Reallocation Shock

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  • Jose Maria Barrero
  • Nicholas Bloom
  • Steven J. Davis
  • Brent Meyer

Abstract

Drawing on data from the firm-level Survey of Business Uncertainty, we present three pieces of evidence that COVID-19 is a persistent reallocation shock. First, rates of excess job and sales reallocation over 24-month periods have risen sharply since the pandemic struck, especially for sales. We compute these rates by aggregating over monthly firm-level observations that look back 12 months and ahead 12 months. Second, as of December 2020, firm-level forecasts of sales revenue growth over the next year imply a continuation of recent changes, not a reversal. Third, COVID-19 shifted relative employment growth trends in favor of industries with a high capacity of employees to work from home and against those with a low capacity.

Suggested Citation

  • Jose Maria Barrero & Nicholas Bloom & Steven J. Davis & Brent Meyer, 2021. "COVID-19 Is a Persistent Reallocation Shock," FRB Atlanta Working Paper 2021-3, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:89580
    DOI: 10.29338/wp2021-03
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    1. Barrero, Jose Maria & Bloom, Nick & Davis, Steven J., 2020. "Why Working From Home Will Stick," SocArXiv wfdbe, Center for Open Science.
    2. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    3. Alexander Bick & Adam Blandin & Karel Mertens, 2023. "Work from Home before and after the COVID-19 Outbreak," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(4), pages 1-39, October.
    4. Altig, David & Barrero, Jose Maria & Bloom, Nicholas & Davis, Steven J. & Meyer, Brent & Parker, Nicholas, 2022. "Surveying business uncertainty," Journal of Econometrics, Elsevier, vol. 231(1), pages 282-303.
    5. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805, Elsevier.
    6. Veronica Guerrieri & Guido Lorenzoni & Ludwig Straub & Iván Werning, 2022. "Macroeconomic Implications of COVID-19: Can Negative Supply Shocks Cause Demand Shortages?," American Economic Review, American Economic Association, vol. 112(5), pages 1437-1474, May.
    7. Dimitris Papanikolaou & Lawrence D W Schmidt, 2022. "Working Remotely and the Supply-Side Impact of COVID-19 [The unprecedented stock market reaction to COVID-19]," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 12(1), pages 53-111.
    8. Erik Brynjolfsson & John J. Horton & Adam Ozimek & Daniel Rock & Garima Sharma & Hong-Yi TuYe, 2020. "COVID-19 and Remote Work: An Early Look at US Data," NBER Working Papers 27344, National Bureau of Economic Research, Inc.
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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 > Long-term consequences

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    Cited by:

    1. Fu, Hongqiao & Cheng, Terence C. & Zhan, Jiajia & Xu, Duo & Yip, Winnie, 2024. "Dynamic effects of the COVID-19 pandemic on the demand for telemedicine services: Evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 531-557.
    2. Konings, Jozef & Magerman, Glenn & Van Esbroeck, Dieter, 2023. "The impact of firm-level Covid rescue policies on productivity growth and reallocation," European Economic Review, Elsevier, vol. 157(C).
    3. Bauer Anja & Keveloh Kristin & Mamertino Mariano & Weber Enzo, 2023. "Competing for Jobs: How COVID-19 Changes Search Behaviour in the Labour Market," German Economic Review, De Gruyter, vol. 24(4), pages 323-347, December.
    4. Jose Maria Barrero & Nicholas Bloom & Steven J. Davis, 2020. "Why Working From Home Will Stick," Working Papers 2020-174, Becker Friedman Institute for Research In Economics.
    5. Balgová, Mária & Trenkle, Simon & Zimpelmann, Christian & Pestel, Nico, 2022. "Job search during a pandemic recession: Survey evidence from the Netherlands," Labour Economics, Elsevier, vol. 75(C).
    6. Tito Boeri & Pierre Cahuc, 2022. "Labor Market Insurance Policies in the XXI Century," SciencePo Working papers Main hal-03878719, HAL.
    7. Serdar Birinci & Yusuf Mercan & Kurt See, 2024. "Mismatch Unemployment During COVID-19 and the Post-Pandemic Labor Shortages," Working Papers 2024-025, Federal Reserve Bank of St. Louis, revised 19 Sep 2024.
    8. Nicholas Bloom & Steven J. Davis & Yulia Zhestkova, 2021. "COVID-19 Shifted Patent Applications toward Technologies That Support Working from Home," AEA Papers and Proceedings, American Economic Association, vol. 111, pages 263-266, May.
    9. Sugata Marjit & Gouranga Gopal Das, 2021. "Contact-Intensity, Collapsing Entertainment Sector and Wage Inequality: A Finite Change Model of Covid-19 Impact," CESifo Working Paper Series 9311, CESifo.
    10. Consolo, Agostino & Petroulakis, Filippos, 2022. "Did COVID-19 induce a reallocation wave?," Working Paper Series 2703, European Central Bank.
    11. Bae, Jaewan & Kang, Jangkoo, 2023. "The role of labor in cash holdings: Evidence from the supply-side impact of COVID-19," Economics Letters, Elsevier, vol. 224(C).
    12. John A. Mondragon & Johannes Wieland, 2022. "Housing Demand and Remote Work," NBER Working Papers 30041, National Bureau of Economic Research, Inc.
    13. Garnadt, Niklas & von Rueden, Christina & Thiel, Esther, 2021. "Labour reallocation dynamics in Germany during the COVID-19 pandemic and past recessions," Working Papers 08/2021, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    14. Peter Lambert & Chris Larkin, 2024. "Has work from home shifted the US electoral map?," CEP Occasional Papers 67, Centre for Economic Performance, LSE.
    15. Aitken, Andrew & Singh, Shruti, 2023. "Time to change? Promoting mobility at older ages to support longer working lives," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    16. Basso, Gaetano & Depalo, Domenico & Lattanzio, Salvatore, 2023. "Worker flows and reallocation during the recovery," Labour Economics, Elsevier, vol. 83(C).
    17. Obadić Alka & Viljevac Viktor, 2024. "Labour Market Tightness and Matching Efficiency in Different Labour Market Segments – Do Differences in Education Matter?," South East European Journal of Economics and Business, Sciendo, vol. 19(1), pages 1-17.
    18. Mueller-Langer, Frank & Gómez-Herrera, Estrella, 2022. "Mobility restrictions and the substitution between on-site and remote work: Empirical evidence from a European online labour market," Information Economics and Policy, Elsevier, vol. 58(C).
    19. Gaetano Basso & Domenico Depalo & Salvatore Lattanzio, 2022. "Job flows and reallocation during the recovery," Questioni di Economia e Finanza (Occasional Papers) 704, Bank of Italy, Economic Research and International Relations Area.
    20. Gómez, Ángel Luis & Lattanzio, Salvatore, 2024. "Worker reallocation in Italy and Spain after the COVID-19 pandemic," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(1).
    21. Bureau Benjamin, & Duquerroy Anne, & Giorgi Julien, & Lé Mathias, & Scott Suzanne, & Vinas Frédéric, 2021. "Corporate activity in France amid the Covid-19 crisis. A granular data analysis," Working papers 823, Banque de France.

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    More about this item

    Keywords

    COVID-19; reallocation shock; business expectations; work from home; Survey of Business Uncertainty;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • 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
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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