The Effect of the COVID-19 Pandemic Recession on Less Educated Women's Human Capital: Some Projections
The recession induced by the COVID-19 pandemic resulted in major declines in employment of women, both from the demand side as firms reduced employment and from the supply side resulting from school closures and the closing of many child care facilities. We provide projections of possible impacts of this reduction on less-educated women's future human capital framed within the traditional Mincerian model that implies that wage growth falls if a recession reduces the growth of work experience. Using a modified form of that model, we estimate the impact of recession-induced loss of work experience on wages on pre-COVID data and project impacts following COVID. We project that wage losses one year out from 2020 are relatively modest on average but larger for married women than for unmarried women and for those working in COVID-impacted industries. For married women, it is more severe for younger married mothers, for younger and older married childless women, and for married mothers with older children. School closures are also important for married women with school-age children and increase negative wage impacts by 50 percent. An increase in part-year work projected to occur during the pandemic increases the size of human capital losses.
This is a revised version of the Presidential Address to the Society of Labor Economists annual conference in May, 2021. The authors thank Francine Blau for help with PSID codes and the Smith Richardson Foundation Grant 20181816 for research support. We wish to thank Stefania Albanesi, Joseph Altonji, Benjamin Cowan, James Heckman, V. Joseph Hotz, Michael Keane, Marjorie McElroy, and Claudia Olivetti for comments. Comments from participants of seminars at Rutgers University and the University of Chicago are also appreciated. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.