Covid Lockdown and Employment in the Philippines

Abstract

The COVID-19 pandemic has severely impacted employment worldwide, mainly due to social distancing measures – hard lockdowns especially. Using difference-in-differences (DiD) analysis on Philippine Labor Force Survey (LFS) data, which exploits (1) the preemptive and selective application of a hard lockdown within the country; and (2) the conduct of the LFS coinciding with the imposition of the hard lockdown in April 2020, this study finds that the hard lockdown has a significant impact on employment apart from the general impact of the pandemic. The hard lockdown’s effect falls mainly on the intensive margin (weekly hours worked) rather than on the extensive margin (number of employed) per se. While employment and hours worked were generally down during the pandemic, the hard lockdown reduced weekly hours worked by an additional 18 hours. The most heavily affected workers are young male workers with low to medium educational attainment levels; and workers in sectors with low telework potential: Manufacturing, Construction, and Transportation. These results may inform the scope and form of government assistance given the limited fiscal space; and highlight the importance of developing digital skills and technologies to minimize the adverse employment impacts of hard lockdowns.