What we’ve been reading: Jobs and economic transformation

This blog is based on the November 2020 edition of the Knowledge4Jobs newsletter, curated by the World Bank’s Jobs Group and Labor and Skills Global Solutions Group. Click here to sign up for the Knowledge4Jobs newsletter.

Jobs and Economic Transformation (JET) is a special theme under the World Bank Group’s IDA19 addressing key opportunities and constraints facing lower income countries classified under IDA. But the calls for more ambition in addressing better jobs for more people resonate with people and their governments across the world. And the economic impacts of COVID-19 are raising the urgency of the agenda as growth projections fall and job losses mount. Understanding which groups of firms and workers are vulnerable, who is able to adjust, and what it will take to adapt and recover are critical issues that research can inform.

Within the large multi-sectoral JET agenda, we look at labor demand: how shocks are affecting firms and how this is being passed on to their workers. Several papers using new datasets of firm responses are included, providing updated insights on the distributional impacts across sectors, sizes of firms, and the most promising avenues for adaptation.

As countries look ahead to supporting a robust recovery, three areas are getting attention: tailoring support to firms to those with the most potential; expanding the digital economy; and boosting greater resilience, including to climate change. Tourism, as a sector that accounted for 10 percent of job creation pre-COVID-19 and that has been disproportionately hurt, gets particular attention. The works featured in this month's roundup are relevant for informing policy choices, now and after the pandemic.

Entries are working papers unless otherwise noted.

Jobs and Economic Transformation

Data from 100,000 businesses across 51 countries show the extent of the COVID-19 shock and how firms are adjusting. SMEs are disproportionately hurt and firms that can use technology solutions are faring better. (Apedo-Amah et al., September 2020)

Gourinchas et al. estimates the failure rate of SMEs would increase 9 percent during COVID-19 without government support. (September 2020)

Occupations more intensive in face-to-face interactions are largely concentrated among lower wage deciles and more likely held by women. (Avdiu & Nayyar, Economic Letters, December 2020)

Preserving firms' relationships with workers, suppliers, customers, and creditors is needed to avoid bankruptcies. (Didier et al., May 2020)

Altig et al. consider several economic uncertainty indicators for the US and UK before and during the COVID-19 pandemic. (November 2020)

Women with mid to low levels of wages and education are at highest risk of both COVID-19 transmission and in occupations with high automation potential. (Chernoff & Warman, November 2020)

Essential Readings

Business recovery of Sri Lankan microenterprises following the 2004 tsunami was slow, underscoring the role targeted aid may play in speeding up recovery. (Mel et al., Economic Journal, October 2011)

Using Indonesian manufacturing census data, Hallward-Driemeier & Rijkers reject the hypothesis that the East Asian crisis improved the reallocative process. (Review of Economics and Statistics, December 2013)

Earlier downturns accelerated reallocation that improved productivity dynamics; not so with the Great Recession. (Foster et al., Journal of Labor Economics, December 2016)

A Decade After the Global Recession discusses how most emerging market and developing economies weathered the global recession relatively well, taking advantage of sizeable fiscal and monetary policy ammunition accumulated during the prior years of strong growth. (Kose & Ohnsorge (eds), World Bank, December 2019)

Broader Jobs Agenda

Rebuilding Investor Confidence: Actionable recommendations for governments seeking to boost countries’ economic resilience and create jobs. (World Bank, May 2020)

Europe 4.0: Addressing the Digital Dilemma: Digital technologies raise productivity.  Some also expand opportunities for small firms and firms in lagging regions. However, others concentrate benefits among large firms and existing production hubs. (Hallward-Driemeier et al., November 2020)

How to integrate resilience in the tourism sector’s competitiveness agenda (World Bank, October 2020).

Building Back Better Micro and SMEs: ‘Who’ to target, ‘where’ work will be needed for a job-rich recovery, ‘what’ to aim for, and ‘how’ we should deliver meaningful action. (International Labour Organization, October 2020)

COVID-19 Related Articles

New estimates of Who on Earth can work from home. (Garrote Sanchez et al., July 2020)

While bankruptcies of major airlines get widely reported, the crisis’ effects are more acute for SMEs. 100 million jobs supported by travel and tourism are currently at risk. (World Bank, July 2020)

Policies to support firms may serve to impede reallocation responses to the COVID-19 shock. (Barrero et al., June 2020)

In recent US recessions, more men tend to lose jobs than women. However, the reverse has been the case during the COVID-19 crisis. (Alon et al., August 2020)

During COVID-19, SME enterprise sales have shrunk faster than for large firms and their cash has drained faster. (Adian et al., September 2020)

Using data on over 100 million posted jobs on one of the largest online platforms in China, Fang et. al. find that initially firms most exposed to international trade outperformed other firms; however as COVID-19 spread throughout the world these firms began to underperform.