Supply and demand shocks in the COVID-19 pandemic: An industry and occupation perspective

17 April 2020

CEPR Covid Economics

R. Maria del Rio-Chanona, Penny Mealy, Anton Pichler, François Lafond and J. Doyne Farmer

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The authors provide quantitative predictions of first-order supply and demand shocks for the US economy associated with the COVID-19 pandemic at the level of individual occupations and industries. To analyze the supply shock, they classify industries as essential or non-essential and construct a Remote Labor Index, which measures the ability of different occupations to work from home. Demand shocks are based on a study of the likely effect of a severe influenza epidemic developed by the US Congressional Budget Office. Compared to the pre-COVID period, these shocks would threaten around 22% of the US economy's GDP, jeopardise 24% of jobs and reduce total wage income by 17%.