Pandemic Recession: L or V-Shaped?

Victoria Gregory, Guido Menzio and David Wiczer

Department of Economics Working Papers from Stony Brook University, Department of Economics

Abstract: We develop and calibrate a search-theoretic model of the labor market in order to forecast the evolution of the aggregate labor market during and after the coronavirus pandemic. The model is designed to capture the heterogeneity of the transitions of individual workers across states of unemployment, employment and across different employers. The model is also designed to capture the trade-offs in the choice between temporary and permanent layoffs. Under reasonable parametrizations of the model, the lockdown instituted to prevent the spread of the novel coronavirus is shown to have long-lasting negative effects on unemployment. This is so because the lockdown disproportionately disrupts the employment of workers who need years to find stable jobs.

Date: 2020
New Economics Papers: this item is included in nep-dge and nep-gen
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Citations: View citations in EconPapers (74)

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Related works:
Journal Article: Pandemic Recession: L- or V-Shaped? (2020)
Working Paper: Pandemic Recession: L or V-Shaped? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:nys:sunysb:20-06

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