| Affiliation: | 1. Department of Economics, IUPUI, Indianapolis, Indiana, USA;2. O’Neill School of Public and Environmental Affairs, Indiana University, Indianapolis, Indiana, USA;3. School of Public Health, University of Michigan, Ann Arbor, Michigan, USA;4. School of Public and International Affairs, University of Georgia, Athens, Georgia, USA;5. Department of Economics, University of Georgia, Athens, Georgia, USA;6. O’Neill School of Public and Environmental Affairs, Indiana University, Indianapolis, Indiana, USA NBER, Cambridge, Massachusetts, USA;7. Department of Economics, Ohio State University, Columbus, Ohio, USA |
| Abstract: | US workers receive unemployment benefits if they lose their job, but not for reduced working hours. In alignment with the benefits incentives, we find that the labor market responded to COVID-19 and related closure-policies mostly on the extensive (12 pp outright job loss) margin. Exploiting timing variation in state closure-policies, difference-in-differences (DiD) estimates show, between March 12 and April 12, 2020, employment rate fell by 1.7 pp for every 10 extra days of state stay-at-home orders (SAH), with little effect on hours worked/earnings among those employed. Forty percentage of the unemployment was due to a nationwide shock, rest due to social-distancing policies, particularly among “non-essential” workers. |
