Baldwin and Forslid (2020) posit that labour markets are more robust in nations better endowed with human capital, as high-skill workers are more likely to have flexible work arrangements. High-skill jobs can also be accommodated more easily in a period of social distancing and lockdown measures. If this hypothesis is correct, the recovery in labour force participation in the wake of COVID-19 will be faster in countries with higher human capital. We find that this is indeed the case in a sample of 45 mostly OECD economies during the first year of the pandemic (Figure 1).
Figure 1 Nations with higher human capital recovered faster
Note: The change in the Labour Force Participation Rate is measured between second quarter of 2020 and second quarter of 2021. We use a measure ofRead More »