DP14825 The first weeks of the coronavirus crisis: Who got hit, when and why? Evidence from Norway

Author(s): Annette Alstadsaeter, Bernt Bratsberg, Gaute Eielsen, Wojciech Kopczuk, Simen Markussen, Oddbjørn Raaum, Knut Røed
Publication Date: May 2020
Keyword(s):
JEL(s): E24, J6
Programme Areas: Labour Economics, Monetary Economics and Fluctuations
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14825

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.