Lockdowns and Labor Market Dynamics

Nations worldwide implemented policies aimed at reducing people's mobility to reduce the spread of Covid-19. This proposal seeks to examine the impact of lockdowns on the labor market dynamics among disadvantage groups. By conceptualizing lockdowns as unanticipated shocks to local labor markets, we will extend the literature documenting their impact on the economy (even after accounting for health benefits). Notably, the analysis will assess local job destruction during lockdowns and job creation once they are gradually eased across cities (and local labor markets re-open), a first in the literature. To this end, the empirical analysis will combine administrative matched employer-employee panel data from Chile and municipality-level longitudinal information from the nation's coronavirus disease outbreak system (mobility restrictions, number of Covid cases, and vaccine rollout). The identification strategy will exploit the country's unique dynamic and gradual implementation of lockdowns across geographical areas launched in July 2020. In addition, since initiatives designed to prevent people from getting the disease, such as lockdowns (and potentially vaccines), could impact economic outcomes (employment and earnings), we focus our analysis on groups particularly susceptible to labor market shocks: women, youths (18-20 years of age) and immigrants. Findings from this study will be used to support external grant submissions to the National Science Foundation, the National Institutes of Health, the World Bank, and the Inter-American Development Bank.