Understanding and Predicting Job Losses due to COVID-19 : Empirical Evidence from Middle Income Countries
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 for permanent formal private sector (PFPS) jobs in core productive manufacturing and service sectors (captured by World Bank Enterprise Surveys) in Jordan and Georgia. Comparing the empirical findings across the two countries, 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. The sensitivity of employment to closures, supply disruptions, and sales shocks was of similar magnitudes 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.
| Main Authors: | , , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022-02
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| Subjects: | CORONAVIRUS, COVID-19, PANDEMIC IMPACT, JOB LOSS, LABOR MARKET, FIRMS, EMPLOYMENT, SURVEY, |
| Online Access: | http://documents.worldbank.org/curated/en/348821644421042532/Understanding-and-Predicting-Job-Losses-due-to-COVID-19-Empirical-Evidence-from-Middle-Income-Countries http://hdl.handle.net/10986/36973 |
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| Summary: | 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 for permanent formal private sector
(PFPS) jobs in core productive manufacturing and service
sectors (captured by World Bank Enterprise Surveys) in
Jordan and Georgia. Comparing the empirical findings across
the two countries, 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. The sensitivity of employment to
closures, supply disruptions, and sales shocks was of
similar magnitudes 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. |
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