Academic Literature

Covid and Labour Demand in US Cities – Factors related to regional resilience

This paper presents a contemporary analysis of the labour market dynamics during the first months of the COVID-19 pandemic, a crisis that affected all facets of life across the world. Research that investigates previous economic crises shows that subnational regions react very differently to the same shock (Martin, 2012[6]) and that regional characteristics play a role in how places fare during economic downturns. The ongoing crisis, however, is very different from all other recessions in recent history.

The analysis reveals that regional characteristics, which used to be generally associated with stronger economic performance in the past, did not offer a hedge (at least initially) against the ongoing crisis when it comes to job postings. Online vacancies in larger metropolitan areas contracted more and took longer to show signs of recovery in the first half of 2020. In a similar vein, more educated places but also places with more diverse industrial structure within major sectors fared worse. This can be partially explained by the geography and timing of the virus spread. Larger cities, which tend to have higher educational attainment and more sophisticated industrial structure, became the first hotspots of the infection in the country. Yet, the fact that these same places were slower to recover suggests other factors at play too. Part of the effect could be due to (temporary) shedding of the “nonessential” jobs, which are likely to account for a greater share of employment in larger cities.

As businesses were rapidly embracing teleworking during the pandemic, the prevalence of jobs that can be performed remotely in a region appears linked to the resilience of urban labour demand approximated by online vacancy announcements. This paper offers evidence of a positive link between the share of teleworkable jobs and growth in job postings in US MSAs. The link appears stronger in the recovery phase (May-June) of the crisis. Finally, the paper documents differences in labour demand for teleworkable and non-teleworkable occupations across different types of places.

Although the study focuses on a very short period and employs research design unable to detect causation, the analysis advances our knowledge of the ongoing changes in urban online labour demand in the US. This contributes to the efforts to document and understand regional differences in weathering the current (in many respects unique) crisis. Such understanding is the first step in designing (place-based) policies that can bolster economic resilience of a place, making it less susceptible to the negative effects of adverse events in the future.

As more data become available, studying labour market dynamics in other types of regions (rural, intermediate) will provide a better understanding of geographical differences in COVID-19 impacts across regional types but also across countries. Moreover, greater data availability will also make possible research designs that are able to identify causal links offering actionable insights for policy makers.

Chosen excerpts by Job Market Monitor. Read the whole story @ OECD iLibrary | Labour demand weakening during the COVID-19 pandemic in US cities: Stylised facts and factors related to regional resilience

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