The impact of the COVID-19 pandemic on post-great recession entrants: Evidence from Mexico

Abstract

I study the impact of the COVID-19 pandemic on the formal employment of entrants from each post-Great Recession year. Using longitudinal Mexican social security records and an individual fixed effects difference-in-differences design, I find that the pandemic caused entrants from each post-Great Recession year to lose formal employment at higher rates than individuals who joined the formal sector before them. This gap is narrowing as the economy recovers. My results are explained by differences in firm-specific tenure and pre-pandemic wages, not by geographical variations in hysteresis from the Great Recession.