Skill Loss during Unemployment and the Scarring Effects of the COVID-19 Pandemic

Paul Jackson () and Victor Ortego-Marti
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Paul Jackson: National University of Singapore

No 202020, Working Papers from University of California at Riverside, Department of Economics

Abstract: We integrate the SIR epidemiology model into a search and matching framework in which workers lose human capital during unemployment. As the number of infections rises, fewer jobs are created, the unemployment rate increases and the composition of skills among the unemployed deteriorates, thereby reducing TFP. We calibrate the model to quantify the effect of a three month lockdown on TFP through loss of skill during unemployment. Sixty-two weeks after the pandemic begins, TFP reaches its lowest value with a decline of 0.56%, which is nearly 50% of the productivity losses typically seen in recessions.

Keywords: COVID-19; Skill loss; TFP; Search and matching; Unemployment; Pandemics (search for similar items in EconPapers)
JEL-codes: E2 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-dge, nep-mac and nep-sea
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Citations: View citations in EconPapers (1)

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https://economics.ucr.edu/repec/ucr/wpaper/202020.pdf First version, 2020 (application/pdf)

Related works:
Journal Article: Skill loss during unemployment and the scarring effects of the COVID-19 pandemic (2024)
Working Paper: Skill Loss during Unemployment and the Scarring Effects of the COVID-19 Pandemic (2021)
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