Cross-Country Analysis of Labor Markets during the COVID-19 Pandemic

The authors study employment outcomes during the early stages of the COVID-19 pandemic in eight countries with different case levels and policy responses: the United States, Australia, France, Denmark, Italy, South Korea, Spain, and Sweden. While the share of people not at work increased in all countries, safety net policies seem to influence whether people remained employed (but absent from work) versus unemployed or left the labor force. The authors find large employment decreases among middle-educated and young workers, increasing disparities in countries with the largest labor market declines. A variety of evidence suggests that labor demand was likely a larger driver of employment declines than labor supply and that stringent social distancing policies were sufficient to reduce employment even in the absence of high cases. Lastly, job characteristics - the importance of face-to-face interactions and the ability to work remotely - were closely related to labor market outcomes, with these relationships being stronger in countries with more cases.