In the spring of 2015, after having submitted my phd thesis, I attended an applied microeconometics course at the University of Oslo given by Monique de Haan, Tarjei Havnes and Edwin Leuven. I have previously blogged about a paper using the synthetic control method that grew directly out of that course. Now a second paper originating in a presentation in that course has been published: “Distributional effects of welfare reform for young adults: An unconditional quantile regression approach,” Labour Economics, Volume 65, August 2020. The article is open access.
Using real-time register data we document the magnitude, dynamics and socio-economic characteristics of the crisis-induced temporary and permanent layoffs in Norway. We find evidence that the effects of social distancing measures quickly spread to industries that were not directly affected by policy. Close to 90% of layoffs are temporary, although this classification may change as the crisis progresses. Still, there is suggestive evidence of immediate stress on a subset of firms that manifests itself in permanent rather than temporary layoffs. We find that the shock had a strong socio-economic gradient, hit a financially vulnerable population, and parents with younger children, and was driven by layoffs in smaller, less productive, and financially weaker firms. Consequently though, the rise in unemployment likely overstates the loss of output associated with the layoffs by about a third.
During the past two weeks, registered unemployment in Norway increased from 2.3 to 10.4 percent of the labor force, and is still on a rapid rise. Most unemployment claims come from workers who are laid off temporarily, but the uncertainty with respect to future job prospects is large. We now present the first results from an empirical analysis of the surge in unemployment during the first weeks of the Corona crisis. Unique close-to-real-time administrative data shows that temporary layoffs quickly spread from service jobs requiring close interaction with customers, to a broad set of jobs. Within 10 days of the surge in temporary layoffs, almost 60 percent of all private sector businesses had laid off staff. The resultant unemployment hit a broad segment of the labor force, yet with a conspicuous social gradient: Workers with low wages, low education, and limited economic resources were overrepresented among the first to lose their job.