Modeling and evaluating the heterogeneous impacts of the COVID-19 on US unemployment

Malak Kandoussi and Francois Langot

Economic Modelling, 2025, vol. 143, issue C

Abstract: During the COVID-19 lockdown, the labor market faced unprecedented disruptions, particularly in unemployment, job separation, and the job finding rate. These unprecedented economic disruptions challenge existing models for understanding and assessing government interventions. This paper shows that a general equilibrium model with matching frictions may explain the impact of this crisis on US unemployment, while accounting for the contrasted impacts across various job types. This model is calibrated on the subprime-crisis experience and then used to identify the job-specific lockdown shocks, allowing it to predict the observed worker flows by diploma. The unemployment persistence is lowered by the CARES Act, which acted as a damping mechanism against its sharp increase by slowing down the separation dynamics and increasing the rate of hirings.

Keywords: COVID-19; CARES Act; Unemployment; Worker heterogeneity (search for similar items in EconPapers)
JEL-codes: E24 E32 J64 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:143:y:2025:i:c:s0264999324003353

DOI: 10.1016/j.econmod.2024.106978

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