An Indirect Estimate Of COVID On The Labor Supply

A new study indirectly estimates the combined impact of long COVID, acute COVID hospitalization for more than week, and COVID deaths, on the U.S. labor supply.

COVID reduced the size of the U.S. labor force by about 500,000 people losing $9,000 of wages each, of which about $8,100 each was from absences after the first week of COVID related sick leave, an average of about 9 more weeks of lost earnings, although like any arithmetic mean, this can probably be broken into a minority who lost much more than ten weeks of work, and a majority who lost significantly less than ten weeks of work.

The abstract and citation for the study are as follows:

We show that Covid-19 illnesses and related work absences persistently reduce labor supply. Using an event study, we estimate that workers with week-long Covid-19 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 absences have reduced the U.S. labor force by approximately 500,000 people (0.2 percent of adults) and imply an average labor supply loss per Covid-19 absence equivalent to $9,000 in forgone earnings, about 90 percent of which reflects losses beyond the initial absence week.

Gopi Shah Goda and Evan J. Soltas, "The impacts of Covid-19 absences on workers" 222 Journal of Public Economics 104889 (June 2023).