How Did the Covid-19 Crisis Affect Different Types of Workers in the Developing World?

Maurice Kugler,Daniel Duque,Amparo Palacios-Lopez,Isis Gaddis,David Locke Newhouse,Mariana Viollaz,Michael Weber

doi:10.2139/ssrn.3883795

Abstract

This paper investigates the impacts of the economic shock caused by the COVID-19 pandemic on the employment of different types of workers in developing countries. Employment outcomes are taken from a set of high-frequency phone surveys conducted by the World Bank and National Statistics Offices in 40 countries. Larger shares of female, young, less educated, and urban workers stopped working. Gender gaps in work stoppage were particularly pronounced and stemmed mainly from differences within sectors rather than differential employment patterns across sectors. Differences in work stoppage between urban and rural workers were markedly smaller than those across gender, age, and education groups. Preliminary results from 10 countries suggest that following the initial shock at the start of the pandemic, employment rates partially recovered between April and August, with greater gains for those groups that had borne the brunt of the early jobs losses. Although the high-frequency phone surveys greatly over-represent household heads and therefore overestimate employment rates, case studies in five countries suggest that they provide a reasonably accurate measure of disparities in employment levels by gender, education, and urban/rural location following the onset of the crisis, although they perform less well in capturing disparities between age groups. These results shed new light on the labor market consequences of the COVID-19 crisis in developing countries, and suggest that real-time phone surveys, despite their lack of representativeness, are a valuable source of information to measure differential employment impacts across groups during a crisis.

Highlights

The 2020-21 COVID-19 crisis represented an unprecedented and massive shock to labor markets worldwide
The robustness checks above, while encouraging, only partially address a key question that arises when analyzing phone surveys: Does the skewed selection of household respondents bias the assessment of which types of workers experienced the largest declines in employment? As noted above, the High Frequency Phone Surveys (HFPS) sampling strategy leads to bias because it only samples one member per household, which tends to be the head in most countries that drew the sample from a previous survey
The primary objective of this research was to identify which groups were hit hardest by the labor market impacts of COVID-19. This question was answered for demographic groups based on respondents’ gender, age, education, and urban/rural location, combining information from the HFPS for 40 countries

Summary

Introduction

The 2020-21 COVID-19 crisis represented an unprecedented and massive shock to labor markets worldwide. Empirical evidence from developed countries suggests that traditionally disadvantaged workers in the labor market were disproportionately affected by the pandemic (Lee et al, 2021; Fairlie et al, 2020). These studies document that inequality has been exacerbated by utilizing a variety of data sources to explore the labor market impacts of the pandemic, such as government administrative data, real-time surveys, and information from social media. This study draws on information from a set of High Frequency Phone Surveys (HFPS), collected and harmonized by the World Bank for 40 countries, to explore which types of workers in developing countries were hit hardest by the labor market impacts of COVID-19. This paper focuses on the distributional implications of the crisis, in order to shed light on the extent to which the crisis is exacerbating traditional disparities and the potential need for policy interventions

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