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Back to Business and (Re)employing Workers? Labor Market Activity During State COVID-19 Reopenings

Wei Cheng, Patrick Carlin, Joanna Carroll, Sumedha Gupta, Felipe Lozano Rojas, Laura Montenovo, Thuy D. Nguyen, Ian M. Schmutte, Olga Scrivner, Kosali I. Simon, Coady Wing, Bruce Weinberg

NBER Working Paper No. 27419
Issued in June 2020
NBER Program(s):Health Care, Health Economics, Labor Studies

We study the effect of state reopening policies on a large set of labor market indicators through May 2020 to: (1) understand the recent increase in employment using longitudinal as well as cross-sectional data, (2) assess the likely trajectory of reemployment going forward, and (3) investigate the strength of job matches that were disrupted by COVID-19. Estimates from event studies and difference-in-difference regressions suggest that some of the recent increases in employment activity, as measured by cellphone data on work-related mobility, internet searches related to employment, and new and continuing unemployment insurance claims, were likely related to state reopenings, often predating actual reopening dates somewhat. We provide suggestive evidence that increases in employment stem from people returning to their prior jobs: reopenings are only weakly related to job postings, and longitudinal CPS data show that large shares of the unemployed-on-layoff and employed-but-absent in April who transitioned to employment in May remain in the same industry or occupation. Longitudinal CPS estimates further show declines in reemployment probabilities with time away from work. Taken together, these estimates suggest that employment relationships are durable in the short run, but raise concerns that employment gains requiring new employment matches may not be as rapid.

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Document Object Identifier (DOI): 10.3386/w27419

 
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