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Modeling and evaluating the heterogeneous impacts of the COVID-19 on US unemployment

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  • Kandoussi, Malak
  • Langot, François

Abstract

During the COVID-19 lockdown, the labor market faced unprecedented disruptions, particularly in unemployment, job separation, and the job finding rate. These unprecedented economic disruptions challenge existing models for understanding and assessing government interventions. This paper shows that a general equilibrium model with matching frictions may explain the impact of this crisis on US unemployment, while accounting for the contrasted impacts across various job types. This model is calibrated on the subprime-crisis experience and then used to identify the job-specific lockdown shocks, allowing it to predict the observed worker flows by diploma. The unemployment persistence is lowered by the CARES Act, which acted as a damping mechanism against its sharp increase by slowing down the separation dynamics and increasing the rate of hirings.

Suggested Citation

  • Kandoussi, Malak & Langot, François, 2025. "Modeling and evaluating the heterogeneous impacts of the COVID-19 on US unemployment," Economic Modelling, Elsevier, vol. 143(C).
    • Handle: RePEc:eee:ecmode:v:143:y:2025:i:c:s0264999324003353
    DOI: 10.1016/j.econmod.2024.106978
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    More about this item

    Keywords

    COVID-19; CARES Act; Unemployment; Worker heterogeneity;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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