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This Time is Not so Different: Income Dynamics During the COVID-19 Recession

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  • Brian D. Bell
  • Nicholas Bloom
  • Jack Blundell

Abstract

We use a UK employer-employee administrative earnings dataset to investigate the response of earnings and hours to business cycles. Exploiting our long panel of data from 1975 to 2020 we find wide heterogeneity in the exposure of different types of workers to aggregate shocks. Employees who are younger, male, lower-skilled, non-union, and working in smaller private sector firms show the largest earnings response to recessions. The qualitative patterns of earnings changes across workers observed in the COVID-19 recession are broadly as predicted using the previously estimated exposures and size of the GDP shock. This suggests the COVID-19 recession in terms of its impact responses was relatively similar to those that have gone before, but the GDP shock was far larger in absolute size. Compared to aggregate shocks, we find a relatively small role of firm-specific shocks, suggesting macro shocks play an outsized role in individual earnings dynamics.

Suggested Citation

  • Brian D. Bell & Nicholas Bloom & Jack Blundell, 2021. "This Time is Not so Different: Income Dynamics During the COVID-19 Recession," NBER Working Papers 28871, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28871
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    2. Bozena Wielgoszewska & Alex Bryson & Monica Costa-Dias & Francesca Foliano & Heather Joshi & David Wilkinson, 2021. "Exploring the Reasons for Labour Market Gender Inequality a Year into the Covid-19 Pandemic: Evidence from the UK Cohort Studies," DoQSS Working Papers 21-23, Quantitative Social Science - UCL Social Research Institute, University College London.
    3. Bridges, Jonathan & Green, Georgina & Joy, Mark, 2021. "Credit, crises and inequality," Bank of England working papers 949, Bank of England.
    4. Carter, Colin A. & Steinbach, Sandro & Zhuang, Xiting, 2022. "Global Shipping Container Disruptions and U.S. Agricultural Exports," Working Papers 320397, International Agricultural Trade Research Consortium.
    5. Banerjee, Pradip & Dhole, Sandip & Mishra, Sagarika, 2023. "Operating performance during the COVID-19 pandemic: Is there a business group advantage?," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    6. Silvia Sarpietro & Yuya Sasaki & Yulong Wang, 2022. "Non-Existent Moments of Earnings Growth," Papers 2203.08014, arXiv.org, revised Feb 2024.
    7. Vogtenhuber, Stefan & Steiber, Nadia & Mühlböck, Monika, 2023. "Got used to make less: the lasting earnings losses of COVID-19 short-time work," SocArXiv p2qvh, Center for Open Science.
    8. Carter, Colin A. & Steinbach, Sandro & Zhuang, Xiting, 2022. "Global Container Trade Disruptions and U.S. Agricultural Exports," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322364, Agricultural and Applied Economics Association.
    9. Erick Rangel González & Irving Llamosas-Rosas & Sara Hutchinson Tovar, 2024. "Analysis of the initial effects of COVID-19 on jobs affiliated to IMSS, at the national and regional level, by sex and age groups," Working Papers 2024-08, Banco de México.
    10. Bennedsen, Morten & Larsen, Birthe & Schmutte, Ian M. & Scur, Daniela, 2023. "The effect of preserving job matches during a crisis," Labour Economics, Elsevier, vol. 84(C).

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    • J0 - Labor and Demographic Economics - - General

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