Abstract
Over nine million jobs were furloughed in the United Kingdom during the coronavirus pandemic. Using real‐time survey evidence from the UK in April and May 2020, we document which workers were most likely to be furloughed and we analyse variation in the terms on which they furloughed. We find that women were significantly more likely to be furloughed. Inequality in care responsibilities seems to have played a key role: mothers were 10 percentage points more likely than fathers to initiate the decision to be furloughed (as opposed to it being fully or mostly the employer's decision) but we find no such gender gap amongst childless workers. The prohibition of working whilst furloughed was routinely ignored, especially by men who can do a large percentage of their work tasks from home. Women were less likely to have their salary topped up beyond the 80 per cent subsidy paid for by the government. Considering the future, furloughed workers without employer‐provided sick pay have a lower willingness to pay to return to work, as do those in sales and food preparation occupations. Compared with non‐furloughed employees, furloughed workers are more pessimistic about keeping their job in the short to medium run and are more likely to be actively searching for a new job, even when controlling for detailed job characteristics. These results have important implications for the design of short‐time work schemes and the strategy for effectively reopening the economy.
Highlights
The coronavirus outbreak has brought about a severe economic recession
Over nine million jobs were furloughed in the United Kingdom during the coronavirus pandemic
With lockdown measures and business closures in place to contain the spread of the virus, many businesses have seen their activities coming to a halt. This has led to a sharp rise in unemployment rates in many countries affected by the coronavirus pandemic
Summary
The coronavirus outbreak has brought about a severe economic recession. With lockdown measures and business closures in place to contain the spread of the virus, many businesses have seen their activities coming to a halt. We find that ‘not all workers are furloughed ’, and we document differences in the terms under which workers are put on furlough, including whether employers have agreed to top-up their employees’ salaries beyond the state contribution Women and those on low incomes are less likely to have had their wages topped up beyond the 80 per cent provided by the government. The duration of support is a crucial parameter of STW schemes These policies should be active long enough to prevent inefficient layoffs from firms in temporary hardship. Furloughed workers who can do a large proportion of their jobs from home are relatively pessimistic about their chance of keeping their job For these workers, social-distancing measures are unlikely to be the only reason for a low-productivity match and they should not be prevented from moving to more viable firms. Our paper contributes to the literature on the positive externalities arising from sick pay coverage. We show that even amid the pandemic, when the importance of social distancing and self-isolation was salient, workers without sick pay were significantly more likely to work when sick and that workers without sick pay are less willing to return to work from furlough
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