Lockdown accounting

The School of Economics' Jan Grobovšek writes in this CEPR column about the potential GDP and employment effects of lockdown policies for a broad cross-section of countries ranging in income per capita from Niger to Luxembourg.

This column, written in collaboration with Cherles Gottlieb (Univeisty of St. Gallen), Markus Poschke (McGill University), and Fernando Saltiel (Duke University),  shows that the employment and GDP effects of lockdown policies are U-shaped in income per capita. While workers in rich counties have a substantially higher ability to work from home, which mitigates declines in emplyment and GDP, poor countries concentrate employment and value-added in essential sectors that are not shut down. Middle-income counties see the largest declines as they feature relatively large employment shares in non-essential sectors and relative low work from home ability. 

Lockdown policies have had large disruptive effects on economies across the globe. We document that the employment structure of economies across the income per capita spectrum is such that the potential employment and GDP effects of lockdown policies are of a similar magnitude for low- and high-income countries, and strongest for middle-income countries.

Read the full column here.