Economic Sociology Seminar presentation by Daniel Schneider, Harvard Kennedy School.
The Consequences of Unemployment for Service Sector Workers in the U.S. during COVID-19
The COVID19 pandemic caused a sharp negative shock to employment that was concentrated in the service sector. Yet, the pandemic recession was also met by an uncharacteristically generous social safety net response in the United States. A rich and longstanding literature examines the effects of unemployment on individual wellbeing. The COVID19 recession presents a key site to advance this literature by deploying stronger causal estimation strategies and by leveraging the generosity of the governmental response to adjudicate between economic pathways from unemployment to reduced wellbeing and stigma-based pathways. To do so, we draw on detailed employer-employee linked cross-sectional (N=15,219) and panel survey (N=3,307) data collected from hourly service sector workers between April and October of 2020 to estimate the effects of job loss on workers’ health and wellbeing. Across employer fixed-effects and lagged dependent variable models as well as models that focus on job loss stemming from establishment closure, we find consistent negative effects of unemployment on self-rated health, sleep quality, happiness, and psychological distress. Unemployment Insurance, while significantly augmented during the crisis, was often difficult to access and varied in generosity over time. We show that in the Spring of 2020, unemployed workers who accessed UI were no worse off economically than those who remained unemployed, but far better off than unemployed workers who had not yet received UI. Leveraging this economic variation, we show that much, but not all, of the negative effects of unemployment on health operate through the economic pathway.