The (little) reallocation potential of workers most hit by the Covid-19 crisis

Gaetano Basso, Adele Grompone and Francesca Modena

No 597, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The accommodation and food services and entertainment and sport activities are the worst hit by the economic crisis that followed the COVID-19 pandemic. The possibility for these workers to find new jobs might be limited due to low competence and skill levels. We study the employment transitions of these workers before the COVID-19 crisis in Italy and find that, in the medium run, workers employed in accommodation and food service activities were as likely to be employed as those in other non-financial private services were. Entertainment sector employees instead had a higher probability of being non-employed compared with other non-financial private services; if they found a job, these workers moved more frequently to other sectors and occupations. To get insights into the potential for reallocation during the pandemic and post-pandemic periods, we perform a simple counterfactual exercise based on the similarity in skill demand: the evidence indicates there is little reallocation potential for these hard-hit workers, especially if service demand remains depressed for a long time.

Keywords: Covid-19; employment transitions; Italy; tourism (search for similar items in EconPapers)
JEL-codes: J23 J24 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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