Measuring labor supply and demand shocks during COVID-19

Pedro Brinca, Joao Duarte and Miguel Faria-e-Castro

European Economic Review, 2021, vol. 139, issue C

Abstract: We measure labor demand and supply shocks at the sector level around the COVID-19 outbreak by estimating a Bayesian structural vector autoregression on monthly statistics of hours worked and real wages. Most sectors were subject to large negative labor supply and demand shocks in March and April 2020, with substantial heterogeneity in the size of shocks across sectors. Our estimates suggest that two-thirds of the drop in the aggregate growth rate of hours in March and April 2020 are attributable to labor supply. We validate our estimates of supply shocks by showing that they are correlated with sectoral measures of telework.

Keywords: Supply and demand shocks; COVID-19; Structural vector autoregressions; Sign restrictions (search for similar items in EconPapers)
JEL-codes: E24 E30 J20 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

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Working Paper: Measuring Labor Supply and Demand Shocks during COVID-19 (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:139:y:2021:i:c:s0014292121002130

DOI: 10.1016/j.euroecorev.2021.103901

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