The numbers are finally capturing the full magnitude of the economic downturn the coronavirus pandemic has caused. The US Bureau of Labor Statistics, for example, recently announced a 14.7% unemployment rate for April.
The working paper is part of a special project by the Becker Friedman Institute of Economics that highlights new economic information about COVID-19.
While this reallocation shock is good news for some sectors, the authors find the news particularly troubling for others.
“We estimate that 42% of recent pandemic-induced layoffs will result in permanent job loss,” says Steven J. Davis of the University of Chicago Booth School of Business, a leading expert on hiring practices, job loss, and the effects of economic uncertainty.
“If the economic shutdown lingers for many months, or if serious pandemics become a recurring phenomenon, there will be profound, long-term consequences for the reallocation of jobs, workers, and capital across firms and locations.”