Age, employment history and the heterogeneity of COVID era employment outcomes

Type Working Paper - NIDS-CRAM Working Paper
Title Age, employment history and the heterogeneity of COVID era employment outcomes
Issue 5
Publication (Day/Month/Year) 2021
Past research suggests that spells of unemployment can cause long-term labour market scarring, and that economic shocks can lead to severe, more persistent unemployment effects for youth in particular. We investigate heterogeneity in employment outcomes between February and October 2020 (as captured by NIDS-CRAM waves 1 to 3) for three age groups: youth (18-24), prime-age adults (25-40) and older adults (41-55). Thereafter, we group adults (within a balanced panel) on the basis of their employment history between 2012 and 2017 (NIDS waves 3 to 5) to study the correlation between 2020 employment outcomes and this employment history. We find evidence for a substantial recovery in employment rates between June and October, leading to October employment rates that were similar to February levels for youth and older adults. Employment recovery was positively correlated with educational attainment among prime-age adults and youth. On the other hand, April job loss was more likely to be persistent for youth relative to older groups. Employment history correlated strongly with 2020 employment outcomes: individuals with a more extensive history of employment were more likely to remain stably employed, or, among the non-employed, to find work.
Importantly, the recovery of employment between April and October was driven to a substantial degree by job finding among people who were non-employed in February, and not just a ‘bounce back’ of April job losers. Together, these findings provide valuable insight into the adjustments, along dimensions of age and employment history, that have occurred in the South African labour market in response to the COVID-19 pandemic and lockdown.

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