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BIA-Brukerstyrt innovasjonsarena

The corona crisis and its economic consequences

Alternative title: Økonomiske konsekvenser av koranakrisen

Awarded: NOK 5.0 mill.

Based on close to real-time register data, we will document the magnitude, dynamics and socio-economic characteristics of the corona crisis and its recovery, the impact of the various government crisis measures, along with analyses of the economic recovery across individuals, families, businesses and regions. The research will be partly be descriptive (what happened?), partly designed to identify mechanisms (why did it happen?), and partly designed to evaluate effects of policies (what should we do about it?) Core topics include - Analyses of temporary and permanent job losses, the subsequent unemployment durations, and their ultimate outcomes - Examination of the distributional consequences of the crisis and the extent to which social insurance programs contributed to a fair burden sharing - Studies of job creation, entrepreneurship and spillovers across industries, and the economy?s ability to reallocate workers and capital to growing industries - Description of matching efficiency between unemployed workers and vacant jobs - Analyses of migration patterns during the crisis and their effects on job opportunities for native workers and labor supply to Norwegian firms. - Studies of how the crisis affected educational choices - Evaluation of the effects of labor market programs during an era of mass layoff - Assessment of the major economic support packages implemented by the Norwegian government, including the changes in the unemployment insurance program and the introduction of cash support to cover firms? unavoidable fixed costs - Examination of the role of expectations for firms and investment behavior The project is novel in its tight linkage between independent research and real-time evidence for policy making. The project builds on cooperation between researchers and stakeholders (LO, NHO and NAV). By providing generalizable as well as more crisis-specific knowledge, we intend to contribute to informed policy making during the recovery process. During the early phase of the pandemic, we studied how vulnerable companies are to a loss of revenue, and to what extent the implemented policy instruments have worked. The revenue shock was strong and threatened t many companies in the short run. At the same time, the findings show that crisis policy is effective in limiting the consequences. Overall, the Norwegian and US crisis measures have approximately the same effect, where the measures more than halve the negative effect the crisis has had on profit, liquidity and solvency. Norwegian and US policies alleviate business vulnerability due to the Covid-19 shock equally well, National Tax Journal, September 2020, 73 (3), 805?828. The corona crisis affected workers differently. We have studied the social gradient for lost hours through 2020, compared to contracted working hours in February 2020, across three different dimensions: position in the wage distribution before the crisis, country background and education. The relative fall in working hours was greatest among those who are usually exposed to leaving working life in crises: people with age-adjusted low income in the first place, immigrants, and people with low education. When we correct for observable characteristics, we find that job and personal characteristics explain the entire difference in unemployment exposure between education groups, while the social gradients remain for low-income groups and immigrants. Our results also indicate that unemployment gained a somewhat clearer social gradient as the crisis developed through 2020. These results have been discussed in various webinars in both 2020 and 2021, and will be available in a peer-reviewed article in 2022. The pandemic had a major impact on the labor market. Based on previous research, there is reason to expect that the lay offs and job losses had health consequences. In collaboration with researchers at the National Institute of Public Health, we have analysed the associations between exposure to job losses in 2020 and the use of health services across occupational groups. Extensive lay offs and increase in unemployment during the pandemic go hand in hand with a marked increase in the use of the primary and specialist health services for mental diagnoses. We find no clear increase in health care use for non-mental (somatic) diagnoses. The study is a chapter in the Public Health Report's Theme Edition 2021 from FHI.

Based on close to real-time register data, we will document the magnitude, dynamics and socio-economic characteristics of the corona crisis and its recovery, the impact of the various government crisis measures, along with analyses of the economic recovery across individuals, families, businesses, sectors and regions. The research activities will be partly descriptive (what happened during the crisis and its recovery?), partly designed to identify mechanisms (why did it happen?), and partly designed to evaluate effects of policies (what should we do about it?). Central topics include • An analysis of individual job losses, subsequent unemployment durations and their ultimate outcomes • An examination of the distributional consequences of the crisis and the extent to which social insurance programs contributed to a fair burden sharing • A closer look at spillovers across industries and the economy’s ability to reallocate workers and entrepreneurs from declining to growing industries • An examination of the matching efficiency between unemployed workers and vacancies, with the aim of identifying mismatches related to skills and geography • A study of how migration patterns responded to the crisis, and how this affected job opportunities for native workers and the availability of labor demanded by Norwegian firms. • An examination of how the crisis affected entrepreneurship and an evaluation of the extent to which Norwegian labor market policies are designed to encourage the creation of new jobs. • An analysis of how the crisis affected educational choices during the Spring 2020 • An effect analysis of Norwegian labor market programs during an era of mass layoffs • An assessment of the major economic support packages implemented by the Norwegian government, including the changes in the unemployment insurance program and the introduction of cash support to cover firms’ unavoidable fixed costs • An examination of the role expectations for firms’ investment behavior

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BIA-Brukerstyrt innovasjonsarena