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Skill Loss during Unemployment and the Scarring Effects of the COVID-19 Pandemic


  • Paul Jackson

    () (National University of Singapore)

  • Victor Ortego-Marti

    () (Department of Economics, University of California Riverside)


We integrate the SIR epidemiology model into a search and matching framework in which workers lose human capital during unemployment. As the number of infections rises, fewer jobs are created, the unemployment rate increases and the composition of skills among the unemployed deteriorates, thereby reducing TFP. We calibrate the model to quantify the effect of a three month lockdown on TFP through loss of skill during unemployment. Sixty-two weeks after the pandemic begins, TFP reaches its lowest value with a decline of 0.56%, which is nearly 50% of the productivity losses typically seen in recessions.

Suggested Citation

  • Paul Jackson & Victor Ortego-Marti, 2020. "Skill Loss during Unemployment and the Scarring Effects of the COVID-19 Pandemic," Working Papers 202020, University of California at Riverside, Department of Economics.
  • Handle: RePEc:ucr:wpaper:202020

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    File Function: First version, 2020
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    References listed on IDEAS

    1. Fernando E. Alvarez & David Argente & Francesco Lippi, 2020. "A Simple Planning Problem for COVID-19 Lockdown," NBER Working Papers 26981, National Bureau of Economic Research, Inc.
    2. Andrew Atkeson, 2020. "What Will Be the Economic Impact of COVID-19 in the US? Rough Estimates of Disease Scenarios," NBER Working Papers 26867, National Bureau of Economic Research, Inc.
    3. Fernando Alvarez & David Argente, 2020. "A Simple Planning Problem for COVID-19 Lockdown," Working Papers 2020-34, Becker Friedman Institute for Research In Economics.
    4. Ross Doppelt, 2019. "Skill Flows: A Theory of Human Capital and Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 84-122, January.
    5. Maryam Farboodi & Gregor Jarosch & Robert Shimer, 2020. "Internal and External Effects of Social Distancing in a Pandemic," NBER Working Papers 27059, National Bureau of Economic Research, Inc.
    6. Andrew Atkeson, 2020. "What Will be the Economic Impact of COVID-19 in the US? Rough Estimates of Disease Scenarios," Staff Report 595, Federal Reserve Bank of Minneapolis.
    Full references (including those not matched with items on IDEAS)

    More about this item


    COVID-19; Skill loss; TFP; Search and matching; Unemployment; Pandemics;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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