How 2 out of every 5 jobs lost during COVID-19 may not come back
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.”