Unemployment Paths in a Pandemic Economy

Nicolas Petrosky-Nadeau () and Robert Valletta
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Nicolas Petrosky-Nadeau: Federal Reserve Bank of San Francisco

No 13294, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The COVID-19 pandemic has upended the U.S. economy and labor market. We assess the initial spike in unemployment due to the virus response and possible paths for the official unemployment rate through 2021. Substantial uncertainty surrounds the path for measured unemployment, depending on the path of the virus and containment measures and their impact on reported job search activity. We assess potential unemployment paths based on historical patterns of monthly flows in and out of unemployment, adjusted for unique features of the virus economy. The possible paths vary widely, but absent hiring activity on an unprecedented scale, unemployment could remain in double-digits into 2021. We also find that the increase in measured unemployment could be meaningfully tempered by a substantial reduction in labor force participation.

Keywords: labor market; unemployment; employment; labor force; COVID-19 (search for similar items in EconPapers)
JEL-codes: E24 J21 J60 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2020-05
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (9)

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Working Paper: Unemployment Paths in a Pandemic Economy (2020)
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