The Dutch Labour Market Early on in the Covid-19 Outbreak

What is it about?

The pandemic that started in 2020 has led to the first world-wide economic downturn in recent times triggered by a deadly virus. As the outbreak of COVID-19 commenced, governments were confronted with the dilemma of how to balance the economic and health costs of a surge in COVID-19 cases versus the costs of preventive health measures to stop the spread of the virus. This study analyses the effect of the COVID-19 outbreak on the Dutch labour market at a regional level. Using weekly administrative panel microdata representative of Dutch employees until the end of March 2020, we study whether individual labour market outcomes, as measured by employment, working hours and hourly wages, were more strongly affected in provinces where COVID-19 confirmed cases, hospitalizations and mortality were relatively high.

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Photo by Pam Menegakis on Unsplash

Photo by Pam Menegakis on Unsplash

Why is it important?

The evidence suggests that the decline of the labour market was all due to the impacts from the government-enforced lockdown and higher virus case numbers did not reinforce this decline. The evidence shows that the COVID-19 outbreak, on average, had reduced employment by 2 percentage points, working hours by 1.5 per cent and hourly wages by 0.3 per cent, by the last week of March 2020. We do not observe a region-specific impact of COVID-19 on labour market outcomes. The results show that individual characteristics are more important, including the employee’s age, type of contract and type of job.

Perspectives