This time is not so different: income dynamics during the Covid-19 recession

Brian Bell, Nicholas Bloom and Jack Blundell

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We use a UK employer-employee administrative earnings dataset to investigate the response of earnings and hours to business cycles. Exploiting our long panel of data from 1975 to 2020 we find wide heterogeneity in the exposure of different types of workers to aggregate shocks. Employees who are younger, male, lower-skilled, non-union, and working in smaller private sector firms show the largest earnings response to recessions. The qualitative patterns of earnings changes across workers observed in the COVID-19 recession are broadly as predicted using the previously estimated exposures and size of the GDP shock. This suggests the COVID-19 recession in terms of its impact responses was relatively similar to those that have gone before, but the GDP shock was far larger in absolute size. Compared to aggregate shocks, we find a relatively small role of firm-specific shocks, suggesting macro shocks play an outsized role in individual earnings dynamics.

Keywords: Covid-19; recession; firm-specific shocks; earnings (search for similar items in EconPapers)
Date: 2021-09-02
New Economics Papers: this item is included in nep-eur and nep-mac
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Citations: View citations in EconPapers (10)

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Related works:
Working Paper: This time is not so different: income dynamics during the Covid-19 recession (2021)
Working Paper: This time is not so different: income dynamics during the Covid-19 recession (2021)
Working Paper: This Time is Not so Different: Income Dynamics During the COVID-19 Recession (2021)
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