LABOUR ECONOMICS

Is Private Education Worth it? Evidence from School-to-Work Transitions in Chile
Contreras D, Rodríguez J and Urzúa S
Using comprehensive longitudinal data from Chile, we examine the impact of attending a private high school on labor market outcomes. The empirical strategy exploits conditional independence assumptions and leverages the effects of self-selection based on ability. We establish that private high schools boost average adult earnings by 99-144 dollars a month (relative to public schools), equivalent to a 15-22% premium. We then explore potential channels behind these effects. Both academic and non-academic factors emerge as mediators. Our findings highlight the importance of financial resources, as education investments have long-term impacts on private high school students, while yielding negligible effects for those attending public and voucher schools. Finally, we document the prominent role of firms as mediators of the private school advantages during the school-to-work transition. Our analysis provides new insights into the association between school choice and income disparities, even after controlling for pre-labor market academic performance.
Labour Market Shocks and Parental Investments during the Covid-19 Pandemic
Hupkau C, Ruiz-Valenzuela J, Isphording IE and Machin S
This paper studies spill-over effects of parental labour market shocks at two time points in the Covid-19 crisis: right after its onset in April 2020, and in January 2021. We use rich data from the UK to look at the consequences of immediate and persistent shocks that hit parents' economic livelihoods. These negative labour market shocks have substantially larger impacts when suffered by fathers than by mothers. Children of fathers that suffered the most severe shocks - earnings dropping to zero - are the ones that are consistently impacted. In April 2020, they were 10 percentage points less likely to have received additional paid learning resources, but their fathers were spending about 30 more minutes per day helping them with school work. However, by January 2021, this latter association switches sign, as the negative spill-over onto children's education occurred for those fathers facing more persistent, negative labour market shocks as the crisis progressed. The paper discusses potential mechanisms driving these results, finding a sustained deterioration of household finances and a worsening of father's mental health to be factors at play.
Effects of stay-at-home orders on skill requirements in vacancy postings
Gu R and Zhong L
The COVID-19 pandemic and containment policies have had profound economic impacts on the labor market. Stay-at-home orders (SAHOs) implemented across most of the United States changed the way of people worked. In this paper, we quantify the effect of SAHO durations on skill demands to study how firms adjust labor demand within occupation. We use skill requirement information from the 2018 to 2021 online job vacancy posting data from Burning Glass Technologies, exploit the spatial variations in the SAHO duration, and use instrumental variables to correct for the endogeneity in the policy duration related to local social and economic factors. We find that policy durations have persistent impacts on the labor demand after restrictions are lifted. Longer SAHOs motivate management style transformation from people-oriented to operation-oriented by requiring more of operational and administrative skills and less of personality and people management skills to carry out standard workflows. SAHOs also change the focus of interpersonal skill demands from specific customer services to general communication such as social and writing skills. SAHOs more thoroughly affect occupations with partial work-from-home capacity. The evidence suggests SAHOs change management structure and communication in firms.
From epidemic to pandemic: Effects of the COVID-19 outbreak on high school program choices in Sweden
Aalto AM, Müller D and Tilley JL
We study whether the onset of the COVID-19 crisis affected the program choices of high school applicants in Sweden. Our analysis exploits the fact that the admission process consists of two stages: a preliminary round in which applicants initially rank programs in order of preference and a final round in which they can alter their preliminary rankings. In 2020, the timing of the two rounds happened to provide a unique pre- and post-crisis snapshot of applicants' field-of-study choices. Using school-level data on applicants' top-ranked programs for all admission rounds between 2016 and 2020, we implement a difference-in-differences method to identify the immediate effect of the crisis on demand for programs. We find no change in demand for academic programs, but a decline in top-ranked applications to some of the vocational programs. The declines are most pronounced and robust for programs related to the Accommodation and Food Services sector, which was the most adversely affected industry during the crisis. This finding suggests that labor market considerations influence the study choices made by relatively young students.
The attachment of adult women to the Italian labour market in the shadow of COVID-19
Fiaschi D and Tealdi C
We investigate the attachment to the labour market of women in their 30s, who are combining career and family choices, through their reactions to an exogenous, and potentially symmetric shock, such as the COVID-19 pandemic. We find that in Italy a large number of women with small children, living in the North, left permanent (and temporary) employment and became inactive in 2020. Despite the short period of observation after the burst of the pandemic, the identified impacts appear large and persistent, particularly with respect to the men of the same age. We argue that this evidence is ascribable to specific regional socio-cultural factors, which foreshadow a potential long-term detrimental impact on female labour force participation.
The Effects of Covid-19 on Couples' Job Tenures: Mothers Have it Worse
Lafuente C, Ruland A, Santaeulàlia-Llopis R and Visschers L
We study the effects of the Covid-19 pandemic on the employment contracts and job tenures of couples, and how these are shaped by gender and the presence of children. Using the Spanish Labour Force Survey, we find that women with children have suffered relatively larger losses of higher-duration, permanent jobs since the pandemic than men or women without children. These losses emerge approximately one year after the onset of the pandemic and persist, even though the aggregate male and female employment rate has recovered. Our results point to potential labour market scars, in particular, for mothers, that hide behind standard aggregate employment measures.
Has COVID-19 induced labor market mismatch? Evidence from the US and the UK
Pizzinelli C and Shibata I
This paper studies whether labor market mismatch played an important role for employment dynamics during the COVID-19 pandemic. We apply the framework of Şahin et al. (2014) to the US and the UK to measure misallocation between job seekers and vacancies across sectors until the fourth quarter of 2021. We find that mismatch rose sharply at the onset of the pandemic but returned to previous levels within a few quarters. This implies that, as of late 2021, COVID-19 has not set in motion a large wave of structural reallocation involving significant frictions in the matching process between workers and firms. Consequently, the total loss in employment caused by the rise in mismatch has been even smaller and less persistent during the COVID-19 pandemic than during the Global Financial Crisis. The results are robust to considering alternative definitions of job searchers and to using a measure of "effective" job seekers in each sector.
Search and reallocation in the COVID-19 pandemic: Evidence from the UK
Carrillo-Tudela C, Clymo A, Comunello C, Jäckle A, Visschers L and Zentler-Munro D
The impact of the pandemic on the UK labour market has been extremely heterogeneous across occupations and industries. Using novel data on job search, we document how individuals adjust their job search in response to changing employment patterns across occupations and industries in the UK. We observe that workers changed their search direction in favour of expanding occupations and industries as the pandemic developed. However, non-employed workers are more attached to their previous occupations and workers with low education are more likely to target declining occupations. We also observe workers from declining occupations making fewer transitions to expanding occupations than those who start in expanding occupations, despite targeting these jobs relatively frequently. This suggests those at the margins of the labour market may be least able to escape occupations that declined during the pandemic.
IT shields: Technology adoption and economic resilience during the COVID-19 pandemic
Oikonomou M, Pierri N and Timmer Y
We study the labor market effects of information technology (IT) during the onset of the COVID-19 pandemic, using data on IT adoption covering almost three million establishments in the US. We find that in areas where firms had adopted more IT before the pandemic, the unemployment rate rose less in response to social distancing. IT shields all individuals, regardless of gender and race, except those with the lowest educational attainment. Instrumental variable estimates-leveraging historical routine employment share as a booster of IT adoption- confirm IT had a causal impact on fostering labor markets' resilience. Additional evidence suggests this shielding effect is due to the easiness of working-from-home and to stronger creation of digital jobs in high IT areas.
Home sweet home: Working from home and employee performance during the COVID-19 pandemic in the UK
Deole SS, Deter M and Huang Y
In 2020, many governments responded to the COVID-19 pandemic by encouraging employees to work from home (WFH). Analyzing representative data from the UK, we find that the pandemic-led increases in WFH frequency are associated with a higher self-perceived hourly productivity among employed respondents. Interestingly, changes in WFH frequency are unrelated to the respondents' weekly working hours and weekly wages during the same period. While the WFH-productivity association is more substantial in non-lockdown months, it is inexistent during the months with strict lockdowns, indicating that lockdown measures inhibited the baseline association. The WFH-productivity association is weaker among parents with increased homeschooling needs due to school closures implemented during lockdowns. In addition, the effect heterogeneity analysis identifies the role of crucial job-related characteristics in the baseline association. Finally, looking at the future of WFH, we show that employees' recent WFH experiences and subsequent changes in hourly productivity are intimately associated with their desires to WFH in the future.
What cannot be cured must be endured: The long-lasting effect of a COVID-19 infection on workplace productivity
Fischer K, Reade JJ and Schmal WB
The COVID-19 pandemic has triggered economic shock waves across the globe. Exploiting a natural experiment, this paper estimates how being infected with the virus shapes individual-level productivity after having recovered. Studying the performance of professional athletes in Germany and Italy and applying a staggered difference-in-differences design, we find that individual performance drops by around 6 percent after a previously infected athlete returns to the pitch. This striking deterioration remains persistent over time - amounting to 5% eight months after the infection. The effect increases with age and infection severity, and is spread disproportionally over the course of a match. We detect no productivity effects for other respiratory infections. We take these findings as first evidence that the pandemic might cause long-lasting effects on worker productivity and economic growth.
Can peer mentoring improve online teaching effectiveness? An RCT during the COVID-19 pandemic
Hardt D, Nagler M and Rincke J
Online delivery of higher education has taken center stage but is fraught with issues of student self-organization. We conducted an RCT to study the effects of remote peer mentoring at a German university that switched to online teaching due to the COVID-19 pandemic. Mentors and mentees met one-on-one online and discussed topics like self-organization and study techniques. We find positive impacts on motivation, studying behavior, and exam registrations. The intervention did not shift earned credits on average, but there is evidence for positive effects on the most able students.
Parents under stress: Evaluating emergency childcare policies during the first COVID-19 lockdown in Germany
Schüller S and Steinberg HS
What are the effects of school and daycare facility closures during the COVID-19 pandemic on parental well-being and parenting behavior? Can emergency childcare policies during a pandemic mitigate increases in parental stress and negative parenting behavior? To answer these questions, this study leverages cross-state variation in emergency childcare eligibility rules during the first COVID-19 lockdown in Germany and draws on unique data from the 2019 and 2020 waves of the German AID:A family panel. Employing a triple-differences approach we identify short- to medium-term intention-to-treat effects and find that while emergency care policies did not considerably affect parents' life satisfaction, partnership satisfaction or mental health, they have been effective in diminishing harsh parenting behavior. We find partly gendered effects, specifically on paternal parenting behavior. Our results suggest that decreasing parental well-being likely constitutes a general effect of the pandemic, whereas the observed increase in negative and potentially harmful parenting behavior is largely directly caused by school and daycare facility closures.
Youth disconnection during the COVID-19 pandemic
Borgschulte M and Chen Y
We estimate a model of labor market transitions to understand the surge in youth disconnection and subsequent decline in school enrollment that occurred over the course of the COVID-19 pandemic. We highlight three observations. First, the collapse in full-time work during the spring of 2020 drove the rise in disconnection; however, in addition to the large number of young people becoming disconnected from full-time employment, the transition into full-time work also became more challenging. While transitions to full-time work from full-time work fell by 14 percent, transitions from part-time work and school fell by 43 percent and 28 percent, respectively. Second, transitions from full-time work and school into disconnection remain elevated through 2021 even as the unemployment rate reached historic lows. Finally, comparing the pandemic labor market transitions to the Great Recession, school no longer works as a safe harbor for those who are already enrolled: the surge in persistence in schooling that occurred during the Great Recession is not observed during the pandemic. These compositional changes illustrate the value of measurement of the youth labor market that goes beyond the unemployment rate.
Exploring mental health disability gaps in the labour market: the UK experience during COVID-19
Bryan M, Bryce A, Rice N, Roberts J and Sechel C
People with long-term mental health problems that affect their daily activities are a growing proportion of the UK working population and they have a particularly low employment rate. We analyse gaps in labour market outcomes between mental health disabled and non-disabled people during the COVID-19 pandemic in the UK. We also decompose the outcome gaps in order to explore the relative importance of different factors in explaining these gaps. Our results suggest that the employment effects of the pandemic for mental health disabled people may have been temporary. However, they were more likely to be away from work and/or working reduced hours than people without a disability. Workers with mental health disability were over-represented in part-time work and in caring, leisure and other service occupations, which were disproportionately affected by COVID-19 and the economic response. This is important new evidence on the contribution of segmentation and segregation in explaining the labour market position of people with mental health disability. The longer term effects of the pandemic were still not apparent at the end of our analysis period (2021:Q3), but the concentration of disabled workers in cyclically sensitive sectors and part-time work means that they will always be particularly vulnerable to economic downturns.
Computerization, Obsolescence and the Length of Working Life
Hudomiet P and Willis RJ
This paper analyzes how computerization affected the labor market outcomes of older workers between 1984 and 2017. Using the computerization supplements of the Current Population Survey (CPS) we show that different occupations were computerized at different times, older workers tended to start using computers with a delay compared to younger workers, but computer use within occupations converged to the same levels across age groups eventually. That is, there was a temporary knowledge gap between younger and older workers in most occupations. We estimate how this knowledge gap affected older workers' labor market outcomes using data from the CPS and the Health and Retirement Study. Our models control for occupation and time fixed effects and in some models; we also control for full occupation-time interactions and use middle aged (age 40-49) workers as the control group. We find strong and robust negative effects of the knowledge gap on wages, and a large, temporary increase in transitions from work to non-participation, consistent with a model of creative destruction in which the computerization of jobs made older workers' skills obsolete in birth cohorts that experienced computerization relatively late in their careers. We find larger effects on females and on middle-skilled workers.
Are remote work options the new standard? Evidence from vacancy postings during the COVID-19 crisis
Bamieh O and Ziegler L
This study examines how the COVID-19 crisis has changed the willingness of employers to offer teleworking options. We analyze job descriptions from vacancy postings on the largest Austrian job board to classify whether employers offer the option to telework to new hires. Our results show that the crisis has substantially increased the scope for remote work. About one year after the onset of the crisis, employers were 2-3 times as likely to explicitly offer such an option relative to levels before the pandemic. This effect is particularly strong for jobs that require at least a degree from a higher secondary school. Accounting for changes in vacancies by occupations and firms, we find that the impact is neither driven by an increase in the demand for occupations nor by an increase in vacancies at firms. Although many social distancing restrictions were relaxed again during the summer of 2020, the effect persists throughout the first year of the crisis, suggesting that the pandemic may have long-lasting effects on remote working arrangements. To test the robustness of our results, we merge two external occupation-level teleworking measures to our sample. Both measures are highly correlated with our measure and yield comparable estimates for the impact of the pandemic on vacancies for occupations.
Slack and prices during Covid-19: Accounting for labor market participation
D'Amuri F, De Philippis M, Guglielminetti E and Lo Bello S
Strong labor force participation cyclicality during the Covid-19 pandemic has put further into question the capacity of standard Phillips Curve (PC) models to fully capture labor market cyclical conditions. In this paper, we jointly estimate natural unemployment and participation rates (i.e. compatible with constant inflation) through an augmented PC informed by structural labor market flows across employment, unemployment and inactivity. Focusing on Italy we find that, during the pandemic: (i) natural unemployment has remained unchanged, while natural participation has declined slightly, mostly due to a rise in retirement flows driven by a temporary reduction in pension eligibility rules; (ii) virtually all slack was accounted for by the participation margin, which added significant downward pressures to inflation dynamics.
A babel of web-searches: Googling unemployment during the pandemic
Caperna G, Colagrossi M, Geraci A and Mazzarella G
Researchers are increasingly exploiting web-searches to study phenomena for which timely and high-frequency data are not readily available. We propose a data-driven procedure which, exploiting machine learning techniques, solves the issue of identifying the list of queries linked to the phenomenon of interest, even in a cross-country setting. Queries are then aggregated in an indicator which can be used for causal inference. We apply this procedure to construct a search-based unemployment index and study the effect of lock-downs during the first wave of the covid-19 pandemic. In a Difference-in-Differences analysis, we show that the indicator rose significantly and persistently in the aftermath of lock-downs. This is not the case when using unprocessed (raw) web search data, which might return a partial figure of the labour market dynamics following lock-downs.
Hours and income dynamics during the Covid-19 pandemic: The case of the Netherlands
Janys L, Zimpelmann C, Gaudecker HV, Siflinger B and Holler R
rUsing customized panel data spanning the entire year of 2020, we analyze the dynamics of working hours and household income across different stages of the Covid-19 pandemic. Like many other countries, during this period, the Netherlands experienced a quick spread of the SARS-CoV-2 virus, adopted a set of fairly strict social distancing measures, gradually reopened, and imposed another lockdown to contain the second wave. We show that socioeconomic status is strongly related to changes in working hours, especially when strict economic restrictions are in place. In contrast, household income is equally unaffected for all socioeconomic groups. Examining the drivers of these observations, we find that pandemic-specific job characteristics (the ability to work from home and essential worker status) help explain the socioeconomic gradient in total working hours. Household income is largely decoupled from shocks to working hours for employees. We provide suggestive evidence that large-scale labor hoarding schemes have helped insure employees against shocks to their employers.
COVID-19 doesn't need lockdowns to destroy jobs: The effect of local outbreaks in Korea
Aum S, Lee SYT and Shin Y
Unlike most countries, Korea did not implement a lockdown in its battle against COVID-19, instead successfully relying on testing and contact tracing. Until the summer of 2020, only one region, Daegu-Gyeongbuk, had a significant number of infections, traced to a religious sect. This allows us to estimate the causal effect of the outbreak on the labor market using difference-in-differences. We find that a one per thousand increase in infections caused a 2 to 3 percent drop in local employment in the early spring. We also find that employment losses caused by local outbreaks in the absence of lockdowns were (i) mainly due to reduced hiring by small establishments, (ii) concentrated in the accommodation/food, education, real estate, and transportation industries, and (iii) worst for economically vulnerable workers who are less educated, young, in low-wage occupations, and on temporary contracts, even controlling for industry effects. These patterns are similar to what we observed in the US and UK: The unequal effects of COVID-19 were the same with or without lockdowns. Our findings are consistent with the lifting of lockdowns having led to only modest employment recoveries in the US and UK, absent larger drops in infection rates.