Medium-term Scarring and the Unequal Labor Market Impacts of the COVID-19 Recession: Patterns and Policies for the Recovery

Monday, May 10, 2021 at 14:00-15:30 Vienna time (CEST)

Presenters

Marina M. Tavares, Economist in the Structural Reforms Unit of the IMF’s Research Department
Philippe Wingender, Senior Economist in the World Economic Studies division of the IMF’s Research Department

Moderator

Holger Floerkemeier, Deputy Director, JVI


This event will present two of the analytical chapters of the IMF’s April 2021 World Economic Outlook, which deal with the medium-term economic impacts and prospects for recovery, with emphasis on labor markets and inequality.

After-Effects of the COVID-19 Pandemic: Prospects for Medium-Term Economic Damage

This chapter examines the possible persistent damage (scarring) that may occur from the COVID-19 recession and the channels through which it  may occur. Expected medium-term output losses from the pandemic are substantial, at about 3 percent lower than pre-pandemic anticipated output for the world in 2024. The degree of expected scarring varies across countries, depending on the structure of economies and the size of the policy response. To limit scarring, policymakers should continue to provide support to the most-affected sectors and workers while the pandemic is ongoing. Remedial policies for the setback to human capital accumulation, measures to lift investment, and initiatives to support reallocation will be key to address long-term GDP losses.

Recessions and Recoveries in Labor Markets: Patterns, Policies, and Responses to the COVID-19 Shock

The labor market fallout from the COVID-19 pandemic shock continues, with young and lower-skilled workers particularly hard-hit. This chapter examines the labor market consequences of the crisis, how it compares with previous shocks, and how policies can help. Preexisting employment trends favoring a shift away from jobs that are more vulnerable to automation are accelerating. Policy support for job retention is extremely powerful at reducing scarring and mitigating the unequal impacts from the acute pandemic shock. As the pandemic subsides and the recovery normalizes, a switch toward worker reallocation support measures could help reduce unemployment more quickly and ease the adjustment to the permanent effects of the COVID-19 shock on the labor market.

The webinar will be held in English, with simultaneous translation into Russian.

Participants are encouraged to ask written questions to the presenters using the webinar’s chat forum.

To participate in the webinar please sign up here.

A list of JVI webinars on topical issues in the field of financial stability, fiscal policy, and macroeconomics can be found here.

The schedule of JVI courses – including virtual courses – can be found here.

We look forward to continuing our engagement with you!

Hervé Joly, Director (JVI)

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