Covid: Not a Great Economic Equaliser

by Vincenzo Galasso

Coronavirus has been portrayed as the “great equalizer”. None seems immune to the virus and to the economic consequences of the lockdown measures imposed to contain its diffusion. We exploit novel data from two real time surveys to study the early impact on the labor market of the lockdown in Italy – one of the two countries, with China, hit hard and early. COVID was not a “great economic equalizer.” Quite on the contrary. Low-educated workers, blue collars and low-income service workers were more likely to have stopped working both three-week and six-week after the lockdown. Low-educated workers were less likely to work from home. Blue collars worked more from their regular workplace, but not from home. Low-income service workers were instead less likely to work from the regular workplace. For both blue collars and low-income service workers, the monthly labor income dropped already in March. Not surprisingly, they were less in agreement with the public policy measures that required the closing of (non-essential) business and activities. Some positive adjustments took place between the third and the sixth week from the lockdown: the share of idle workers dropped, as the proportion of individuals working at home and from their regular workplace increased. However, these adjustments benefitted mostly highly educated workers and white collars. Overall, low-income individuals faced worse labor market outcomes and suffered higher psychological costs. 
 

The Paper: "Covid: not a great equiliser"