 Understanding and Predicting Job Losses Due to Covid-19: Empirical Evidence from Middle Income CountriesMaho Hatayama and Yiruo Li No 33707991, Jobs Group Papers, Notes, and Guides from The World Bank Abstract: This paper utilizes firm survey data to understand which formal private sector jobs are most at risk from COVID-19 or similar future crises, based on empirical evidence from two middle income economies. In particular, it estimates the importance for formal private-sector job losses of various COVID-19 pandemic-related labor market shocks and mitigating factors, such as the closure of non-essential industries, workers’ ability to perform their jobs from home, infection risks to workers, customers’ infection risk, global demand shocks, input supply constraints, employers’ financial constraints, and government support, in determining the level and distribution of job losses. This provides an empirical identification of the main risk factors for job loss and a basis for predicting the level and distribution of these losses due to the crisis. The methodology is applied to permanent formal private sector (PFPS) jobs in core productive manufacturing and services sectors (captured by World bank Enterprise Surveys) in Jordan and Georgia, which contain the requisite data to link occupational structure, task content, and firm-level shocks. Comparing empirical findings across the two, the paper assesses the degree of commonality of these risk factors. Job losses are projected for different groups within the employed population prior to the outbreak of COVID-19 and compared with post-crisis labor force data. The results indicate that in these countries the level of job losses is predominantly due to a reduction in demand rather than a reduction in the supply of labor. Closures, global demand shocks, supply disruptions, and other unexplained demand side shocks are significant determinants of jobs lost. Sensitivity of employment to closures, supply disruptions, and sales shocks was of similar magnitude in both countries; however, variation in infection risk was a significant determinant of sales only in Georgia. At the same time, Georgian formal firms were better able to rebound their sales and hire back workers than formal firms in Jordan. Finally, the paper finds no evidence that firms with workers performing tasks that can be performed from home were better able to preserve jobs, given the dominant role of firm-level demand and supply chain shocks. Understanding and Predicting Job Losses Due to COVID-19 : Empirical Evidence from Middle Income Countries Keywords: job loss; private sector wage; labor market impact; labor force survey data; net job loss; labor force participation rate; best linear unbiased estimate; private sector job; high frequency; private sector worker; supply of labor; impacts on employment; middle income economy; categories of worker; unpaid family worker; reduction in employment; change in employment; cross country differences; formal labor market; education and gender; labor market information; labor market outcome; demand for labor; aggregate demand effect; public service provider; labor force data; lack of demand; labor market friction; industry classification system; availability of data; registered private firms; formal sector employment; public health measures; number of researchers; privileges and immunity; follow up survey; labor market context; labor market regulation; risk of infection; cross country analysis; household and individual; third party approval; household level data; lower income countries; development cooperation; labor demand; empirical evidence; labor supply (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wbk:jbsgrp:33707991 Access Statistics for this paper More papers in Jobs Group Papers, Notes, and Guides from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC. |
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