Research Department Special Analysis: An analysis of the adverse impact on households’ employment due to the coronavirus

·         The negative impact on the activity of the principal industries at the peak of the crisis was focused on industries in           which there is relatively high self-employment. As a result, the negative impact on employment was greater among households in which at least one of the earners is self-employed. Thus, for example, based on a simulation that was carried out, for a low-income household with two earners, the probability of remaining unemployed was 19 percent when the earners are self-employed, 15 percent when one of the earners is self-employed, and 12 percent if both earners are salaried employees.

 

·         Weighting the extent of the closures on economic activity by economic industry indicates a harsher negative impact on the employment of low-income households, and among them single parent families. The probability of such households remaining without earners as a result of the economic closure at the peak of the crisis is slightly more than 25 percent, compared with more than 15 percent among households whose per capita income is among the higher deciles.

 

·         In addition, before the crisis, low-income households bore a higher burden of high expenditures on consumption, including rent, which is considered a rigid fixed expense. The share of low-income households with at least one participant in the labor force who have rent expenditure is about 40 percent, compared with slightly more than 20 percent among high-income households. Moreover, the share of expenditure on rent out of total expenditures among households who rent and whose income is low is double the expenditure for similar households with high income.

 

·         The economy’s gradual return to activity (with limitations), including the opening of malls and kindergartens around May 10, reduced the extent of the adverse impact on employment. As a result, the simulations in the analysis indicate a marked decline in the probability of households remaining without earners, by similar percentages at all income levels.​​