Abstract
We use administrative, survey, and online vacancy data to analyze the short-term labor market impacts of the COVID-19 lockdown in Greece. We find that flows into unemployment have not increased; in fact, separations were lower than would have been expected given trends in recent years. At the same time, employment was about 12 percent lower at the end of June than it would have been without the pandemic. Our interrupted time series and difference-in-differences estimates indicate that this was due to a dramatic slowdown in hiring during months when job creation typically peaks in normal years, mostly in tourism. While we do not formally test the reasons for these patterns, our analysis suggests that the measures introduced to mitigate the effects of the crisis in Greece have played an important role. These measures prohibited layoffs in industries affected by the crisis and tied the major form of income support to the maintenance of employment relationships.
Highlights
The COVID-19 pandemic has had dramatic consequences for economies and labor markets around the world
Greece has been an interesting case for studying the COVID-19 pandemic and its impacts on employment
COVID-19 arrived at a point when the economy seemed to be on a sustainable growth path after the economic crisis that had persisted for the past decade
Summary
The COVID-19 pandemic has had dramatic consequences for economies and labor markets around the world. While Greece did not experience the major declines in employment that some other OECD countries did in March, April, and May, these are normally months when employment growth is substantial in the heavily seasonal Greek economy Employment in these months in 2020 differed from the story in previous years not because the lockdown fueled large numbers of separations but rather it choked off new hiring in what should have been expansionary months. A relevant distinction is between countries, like Greece, that have primarily linked their support to the maintenance of the employment relationship through dismissal restrictions, wage subsidies, and short-term compensation and those countries that have largely let layoffs occur and supported workers through unemployment benefits and cash transfers Highlighting this link between policy choices and labor market outcomes is a second contribution of this paper.
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