Hybrid seminar: The persistence and nature of the labor reallocation shock during the COVID-19 crisis

This study finds that the COVID-19 pandemic has led to a unique, large, and relatively persistent labor reallocation shock. Previous recent crises were characterized by automation, which generally led to a decrease in routine-skilled jobs, known as job polarization. In contrast, the COVID-19 crisis, characterized by digitization, is associated with an unprecedentedly large rise in high-income jobs and an unprecedentedly large drop in low-income jobs in the Dutch labor market. These dynamics are strongly associated with the ability to work from home, and not the manual, routine or abstract skill content of jobs as in previous crises. This suggests an acceleration of the importance of digital skills. Post-pandemic trends suggest that the reallocation shock is quite persistent in the type of jobs gained. Furthermore,  I find that the persistent change in the demand for (digital) skills leads to an improved probability to obtain a high-income job for persons with lower levels of education but relatively reduced chances for older persons.