Labor Market Effects of Local Spread of COVID-19

Michael Dalton

Abstract

This paper explores the short-term local labor market impact of the spread of COVID-19 in the

United States, using the Current Employment Statistics survey and the Current Population Survey

microdata. It uses the longitudinal aspect of both these surveys to measure changes in employment

for business establishments and household members. I match the survey respondent to the measured

local incidence of confirmed COVID-19 cases, using confidential information on county of location,

to estimate the impact of the local incidence of the virus, after controlling for multiple measures of

government intervention. I find the greatest declines in employment in counties with higher incidence

of COVID-19. These effects vary by industry: leisure / hospitality and other services have large

declines in employment relative to the effect of the incidence of the virus, while the employment

decline in construction and transportation and warehousing depends more on the local incidence of

the virus. Finance / insurance, a very telework-friendly industry, is unaffected by the incidence of

the virus. These short-term employment effects have implications for future employment patterns

as government restrictions are relaxed and business owners begin to decide whether to open their

businesses while the virus is still active in the United States.