Language:
English
Pages:
1 Online-Ressource (47 pages)
Parallel Title:
Erscheint auch als Ulate, Mauricio Labor Market Effects of Global Supply Chain Disruptions
Keywords:
COVID Impact On Labor Market
;
Downward Nominal Wage Rigidity
;
Macroeconomics and Economic Growth, Rural Labor Markets, Supply Chain Disruption
;
Pandemic Labor Market Impact
;
Rural Development
;
Social Protections and Labor
;
Trade Cost
;
US Labor Force Participation Decline
Abstract:
This paper examines the labor market consequences of recent global supply chain disruptions induced by COVID-19. Specifically, it considers a temporary increase in international trade costs similar to the one observed during the pandemic and analyzes its effects on labor market outcomes using a quantitative trade model with downward nominal wage rigidities. Even omitting any health-related impacts of the pandemic, the increase in trade costs leads to a temporary but prolonged decline in U.S. labor force participation. However, there is a temporary increase in manufacturing employment as the United States is a net importer of manufactured goods, which become costlier to obtain from abroad. By contrast, service and agricultural employment experience temporary declines. Nominal frictions lead to temporary unemployment when the shock dissipates, but this depends on the degree of monetary accommodation. Overall, the shock results in a 0.14 percent welfare loss for the United States. The impact on labor force participation and welfare across countries varies depending on the initial degree of openness and sectoral deficits
DOI:
10.1596/1813-9450-10434
URL:
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