We show that Covid-19 illnesses persistently reduce labor supply. Using an event study, we estimate that workers with week-long Covid-19 work absences are 7 percentage points less likely to be in the labor force one year later compared to otherwise-similar workers who do not miss a week of work for health reasons. Our estimates suggest Covid-19 illnesses have reduced the U.S. labor force by approximately 500,000 people (0.2 percent of adults) and imply an average forgone earnings per Covid-19 absence of at least $9,000, about 90 percent of which reflects lost labor supply beyond the initial absence week.
Gopi Shah Goda Evan J. Soltas
Publication Date: Sept 2022
Publication Site: Stanford University, Stanford Institute for Economic Policy Research (SIEPR)
Main Comments • Stabilization goal is reasonable to consider • However, public sector’s approach to funding with risk assets creates additional issues for this type of debt (unfunded pension liabilities) relative to government bonds • Instability due to market risk isn’t in the model, because the model is deterministic: no distribution of possible outcomes ➢ Higher expected return you target, the greater the distribution of outcomes • Only meaningful scenario is r=d=0% → fiscal adjustment is 14.9% of payroll vs. current 29%. So a 51% increase. ➢ I will provide some reasons I think this might still be too low
A current example of California’s bipartisan capitulation to public employees is OPEB—formally, “Other Post-Employment Benefits”—chiefly, health insurance for retired employees and their dependents costing the state $10 billion per year. Those benefits are provided even when the retiree or dependent has another job that offers insurance, is covered by Medicare, or is entitled to premium support from the Affordable Care Act.
No other state in America showers such subsidies on retired employees, who are already entitled to the highest pensions in the land. But both parties have been obstacles to OPEB reform because both fear retribution from government employee unions. If you have any doubt about that, check out donations to legislators on both sides of the aisle.
Author(s): David Crane
Publication Date: 12 March 2021
Publication Site: Hoover Institution at Stanford University