Publication: Understanding and Predicting Job Losses Due to COVID-19: Empirical Evidence from Middle Income Countries
Date
2021-12
ISSN
Published
2021-12
Author(s)
Hatayama, Maho
Li, Yiruo
Osborne, Theresa
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.
Citation
“Hatayama, Maho; Li, Yiruo; Osborne, Theresa. 2021. Understanding and Predicting Job Losses Due to COVID-19: Empirical Evidence from Middle Income Countries. Jobs Working Paper;No. 65. © World Bank, Washington, DC. http://hdl.handle.net/10986/36865 License: CC BY 3.0 IGO.”