The heterogeneous effects of COVID-19 on labor markets: People's movement and non-pharmaceutical interventions.

The paper investigates the heterogeneous effect of a policy-induced decline in people's mobility on the Japanese labor market outcome during the early COVID-19 period. Regressing individual-level labor market outcomes on prefecture-level mobility changes using policy stringency index as an instrument, our two-stage least squares estimator presents the following findings. First, the number of people absent from work increased for all groups of individuals, but the magnitude was greater for workers with non-regular employment status, low-educated people, females especially with children, and those aged 31 to 45 years. Second, while work hours decreased for most groups, the magnitude was especially greater for business owners without employees and those aged 31 to 45. Third, the negative effect on unemployment was statistically significant for older males who worked as regular workers in the previous year. The impact was particularly considerable for those aged 60 and 65, thus suggesting that they lost their re-employment opportunity due to COVID-19. Fourth, all these adverse effects were greater for people working in service and sales occupations. Fifth, a counterfactual experiment of more stringent policies indicates that while an average worker would lose JPY 3857 in weekly earnings by shortening their work hours, the weekly loss for those aged 31 to 45 years and working in service and sales occupations would be about JPY 13,842.

Trade-off between job losses and the spread of COVID-19 in Japan.

This paper quantitatively analyzes the trade-off between job losses and the spread of COVID-19 in Japan. We derive an empirical specification from the social planner's resource constraint under the susceptible, infected, recovered, and deaths (SIRD) model and estimate how job losses and the case growth rate are related to people's mobility using the Japanese prefecture-level panel data on confirmed cases, involuntary job losses, people's mobility, and teleworkability. Our findings are summarized as follows. First, we find that a decrease in mobility driven by containment policies is associated with an increase in involuntary job separations, but the high teleworkability mitigates the negative effect of decreased mobility on job losses. Second, estimating how the case growth is related to people's mobility and past cases, we find that the case growth rate is positively related to an increase in people's mobility but negatively associated with past confirmed cases. Third, using these estimates, we provide a quantitative analysis of the trade-off between job losses and the number of confirmed cases. Taking Tokyo in July 2020 as a benchmark, we find that the cost of saving 1 job per month is 2.3 more confirmed cases per month in the short run of 1 month. When we consider a trade-off for 3 months from July to September of 2020, protecting 1 job per month requires 6.6 more confirmed cases per month. Therefore, the trade-off becomes worse substantially in the longer run of 3 months, reflecting the exponential case growth when the people's mobility is high.