The numbers are finally capturing the full magnitude of the economic downturn caused by the coronavirus pandemic.
The U.S. Bureau of Labor Statistics, for example, recently announced a 14.7% unemployment rate for April. But other data also provide a more nuanced and sobering view: New research co-authored by Prof. Steven J. Davis of the University of Chicago Booth School of Business reveals that for every 10 layoffs induced by the economic slowdown, three new jobs are created.
While this reallocation shock is good news for some sectors, the authors find the news particularly troubling for others.
“We estimate that 42% of recent pandemic-induced layoffs will result in permanent job loss,” said Davis, a leading expert on hiring practices, job loss and the effects of economic uncertainty. “If the economic shutdown lingers for many months, or if serious pandemics become a recurring phenomenon, there will be profound, long-term consequences for the reallocation of jobs, workers, and capital across firms and locations.”
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