IDEAS home Printed from https://ideas.repec.org/p/hka/wpaper/2020-056.html
   My bibliography  Save this paper

Sectoral Digital Intensity and GDP Growth After a Large Employment Shock: A Simple Extrapolation Exercise

Author

Listed:
  • Giovanni Gallipoli

    (Vancouver School of Economics, UBC)

  • Christos Makridis

    (Arizona State University)

Abstract

We examine the dynamics of GDP following an economy-wide pandemic shock that curtails physical mobility and the ability to perform certain tasks at work. We examine whether greater reliance on digital technologies has the potential to mediate employment and productivity losses. We employ industry-level indices of task-based digital intensity and ability to work from home (“home-shorability†), in conjunction with publicly available data on employment and GDP for Canada, and document that: (i) employment responses after the onset of the shock are milder in digitally-intensive sectors; (ii) conditional on the size of employment changes, GDP responses are less extreme in IT-intensive sectors. We suggest a simple state-dependent algorithm for predicting output dynamics as a function of employment across industries and locations with different digital intensity. In our baseline scenario, aggregate output returns to pre-crisis levels eight quarters after the initial shock onset, although we find significant heterogeneity in recovery patterns across sectors.

Suggested Citation

  • Giovanni Gallipoli & Christos Makridis, 2020. "Sectoral Digital Intensity and GDP Growth After a Large Employment Shock: A Simple Extrapolation Exercise," Working Papers 2020-056, Human Capital and Economic Opportunity Working Group.
  • Handle: RePEc:hka:wpaper:2020-056
    Note: M
    as

    Download full text from publisher

    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Gallipoli_Makridis_2020_sectoral-digital-intensity-gdp-growth.pdf
    File Function: First version, July 25, 2020
    Download Restriction: no

    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Gallipoli_Makridis_2020_sectoral-digital-intensity-gdp-growth_rev1.pdf
    File Function: Second version, August 28, 2020
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Coibion, Olivier & Gorodnichenko, Yuriy & Weber, Michael, 2020. "Labor Markets During the Covid-19 Crisis: A Preliminary View," Department of Economics, Working Paper Series qt7rx7t91p, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    2. Gallipoli, Giovanni & Makridis, Christos A., 2018. "Structural transformation and the rise of information technology," Journal of Monetary Economics, Elsevier, vol. 97(C), pages 91-110.
    3. 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.
    4. Stephen R.G. Jones & Fabian Lange & W. Craig Riddell & Casey Warman, 2020. "Waiting for Recovery: The Canadian Labour Market in June 2020," Canadian Public Policy, University of Toronto Press, vol. 46(S2), pages 102-118, August.
    5. Julian Kozlowski & Laura Veldkamp & Venky Venkateswaran, 2020. "Scarring Body and Mind: The Long-Term Belief-Scarring Effects of COVID-19," NBER Working Papers 27439, National Bureau of Economic Research, Inc.
    6. Thomas Lemieux & Kevin Milligan & Tammy Schirle & Mikal Skuterud, 2020. "Initial Impacts of the COVID-19 Pandemic on the Canadian Labour Market," Canadian Public Policy, University of Toronto Press, vol. 46(S1), pages 55-65, July.
    7. Nicholas Bloom & James Liang & John Roberts & Zhichun Jenny Ying, 2015. "Does Working from Home Work? Evidence from a Chinese Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 130(1), pages 165-218.
    8. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    9. R. Glenn Hubbard & Michael R. Strain, 2020. "Has the Paycheck Protection Program Succeeded?," NBER Working Papers 28032, National Bureau of Economic Research, Inc.
    10. 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.
    11. John (Jianqiu) Bai & Erik Brynjolfsson & Wang Jin & Sebastian Steffen & Chi Wan, 2021. "Digital Resilience: How Work-From-Home Feasibility Affects Firm Performance," NBER Working Papers 28588, National Bureau of Economic Research, Inc.
    12. MORIKAWA Masayuki, 2020. "Productivity of Working from Home during the COVID-19 Pandemic: Evidence from an Employee Survey," Discussion papers 20073, Research Institute of Economy, Trade and Industry (RIETI).
    13. Anand Chopra & Michael B. Devereux & Amartya Lahiri, 2022. "Pandemics through the lens of occupations," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(S1), pages 540-580, February.
    14. João Granja & Christos Makridis & Constantine Yannelis & Eric Zwick, 2020. "Did the Paycheck Protection Program Hit the Target?," Working Papers 2020-52_Revised, Becker Friedman Institute for Research In Economics.
    15. MORIKAWA Masayuki, 2020. "Productivity of Working from Home during the COVID-19 Pandemic: Evidence from an Employee Survey (Japanese)," Discussion Papers (Japanese) 20034, Research Institute of Economy, Trade and Industry (RIETI).
    16. Pierre Brochu & Jonathan Créchet & Zechuan Deng, 2020. "Labour Market Flows and Worker Trajectories in Canada During COVID-19," Working Papers 2005E, University of Ottawa, Department of Economics.
    17. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    18. repec:aei:rpaper:1008582843 is not listed on IDEAS
    19. Koebel, Kourtney & Pohler, Dionne, 2020. "Labor markets in crisis: The causal impact of Canada's COVD19 economic shutdown on hours worked for workers across the earnings distribution," CLEF Working Paper Series 25, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    Full references (including those not matched with items on IDEAS)

    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. Pierre Brochue & Jonathan Créchet, 2021. "Survey Non-response in Covid-19 Times: The Case of the Labour Force Survey," Working Papers 2109E, University of Ottawa, Department of Economics.
    2. Pierre-Olivier Gourinchas & Ṣebnem Kalemli-Özcan & Veronika Penciakova & Nick Sander, 2021. "Fiscal Policy in the Age of COVID: Does it ‘Get in all of the Cracks?’," NBER Working Papers 29293, National Bureau of Economic Research, Inc.
    3. Sebnem Kalemli-Ozcan & Pierre-Olivier Gourinchas & Veronika Penciakova & Nick Sander, 2020. "COVID-19 and SME Failures," IMF Working Papers 2020/207, International Monetary Fund.
    4. Pierre-Olivier Gourinchas & Ṣebnem Kalemli-Özcan & Veronika Penciakova & Nick Sander, 2020. "Estimating SME Failures in Real Time: An Application to the COVID-19 Crisis," NBER Working Papers 27877, National Bureau of Economic Research, Inc.
    5. Kawaguchi, Daiji & Motegi, Hiroyuki, 2021. "Who can work from home? The roles of job tasks and HRM practices," Journal of the Japanese and International Economies, Elsevier, vol. 62(C).
    6. Satoshi Tanaka, 2022. "Economic Impacts of SARS/MERS/COVID‐19 in Asian Countries," Asian Economic Policy Review, Japan Center for Economic Research, vol. 17(1), pages 41-61, January.
    7. Kong, Edward & Prinz, Daniel, 2020. "Disentangling policy effects using proxy data: Which shutdown policies affected unemployment during the COVID-19 pandemic?," Journal of Public Economics, Elsevier, vol. 189(C).
    8. Kristian Behrens & Sergey Kichko & Jacques-Francois Thisse, 2021. "Working from Home: Too Much of a Good Thing?," CESifo Working Paper Series 8831, CESifo.
    9. David Baqaee & Emmanuel Farhi & Michael J. Mina & James H. Stock, 2020. "Reopening Scenarios," NBER Working Papers 27244, National Bureau of Economic Research, Inc.
    10. Brancati, Emanuele & Brancati, Raffaele, 2020. "Heterogeneous Shocks in the Covid-19 Pandemic: Panel Evidence from Italian Firms," GLO Discussion Paper Series 649, Global Labor Organization (GLO).
    11. 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.
    12. Patrick Baylis & Pierre‐Loup Beauregard & Marie Connolly & Nicole M. Fortin & David A. Green & Pablo Gutiérrez‐Cubillos & Samuel Gyetvay & Catherine Haeck & Tímea Laura Molnár & Gaëlle Simard‐Duplain , 2022. "The distribution of COVID‐19–related risks," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(S1), pages 172-213, February.
      • Patrick Baylis & Pierre-Loup Beauregard & Marie Connolly & Nicole Fortin & David A. Green & Pablo Gutierrez Cubillos & Sam Gyetvay & Catherine Haeck & Timea Laura Molnar & Gaëlle Simard-Duplain & Henr, 2020. "The Distribution of COVID-19 Related Risks," NBER Working Papers 27881, National Bureau of Economic Research, Inc.
      • Patrick Baylis & Pierre-Loup Beauregard & Marie Connolly & Nicole Fortin & David A. Green & Pablo Gutiérrez-Cubillos & Samuel Gyetvay & Catherine Haeck & Tímea L. Molnár & Gäelle Simard-Duplain & Henr, 2020. "The Distribution of COVID-19 Related Risks," CIRANO Working Papers 2020s-50, CIRANO.
    13. Greg Kaplan & Benjamin Moll & Giovanni L. Violante, 2020. "The Great Lockdown and the Big Stimulus: Tracing the Pandemic Possibility Frontier for the U.S," NBER Working Papers 27794, National Bureau of Economic Research, Inc.
    14. Toshihiro Okubo, 2021. "Non-routine Tasks and ICT tools in Telework," Keio-IES Discussion Paper Series 2021-017, Institute for Economics Studies, Keio University.
    15. Kosteas, Vasilios D. & Renna, Francesco & Scicchitano, Sergio, 2022. "Covid-19 and Working from Home: toward a "new normal"?," GLO Discussion Paper Series 1013, Global Labor Organization (GLO).
    16. KITAGAWA Ritsu & KURODA Sachiko & OKUDAIRA Hiroko & OWAN Hideo, 2021. "Working from Home: Its Effects on Productivity and Mental Health," Discussion papers 21024, Research Institute of Economy, Trade and Industry (RIETI).
    17. MORIKAWA Masayuki, 2021. "Productivity of Working from Home during the COVID-19 Pandemic: Evidence from a Firm Survey," Discussion papers 21002, Research Institute of Economy, Trade and Industry (RIETI).
    18. David Baqaee & Emmanuel Farhi, 2020. "Nonlinear Production Networks with an Application to the Covid-19 Crisis," NBER Working Papers 27281, National Bureau of Economic Research, Inc.
    19. Benzeval, Michaela & Burton, Jonathan & Crossley, Thomas F. & Fisher, Paul & Jäckle, Annette & Low, Hamish & Read, Brendan, 2020. "The idiosyncratic impact of an aggregate shock: the distributional consequences of COVID-19," Understanding Society Working Paper Series 2020-09, Understanding Society at the Institute for Social and Economic Research.
    20. Auerbach, Alan & Gorodnichenko, Yuriy & McCrory, Peter B. & Murphy, Daniel, 2022. "Fiscal multipliers in the COVID19 recession," Journal of International Money and Finance, Elsevier, vol. 126(C).

    More about this item

    Keywords

    output; digital intensity; employment; Canada; coronavirus; Structural change;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hka:wpaper:2020-056. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/mfichus.html .

    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: Jennifer Pachon (email available below). General contact details of provider: https://edirc.repec.org/data/mfichus.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.