The heterogeneous effects of Covid-19 on labour market flows: evidence from administrative data

We investigate the short term labor market response to the pandemic in Italy and provide a first evaluation of the policies put in place to shield workers from the disruption of economic activity. Using administrative data on a sample of contracts active in the first quarter of 2020, we show that, before the pandemic, workers employed in non-essential activities were in majority men, younger than 35 years old, located in the North of the country and with lower levels of education. When looking at the change in hirings and separations and decomposing it by age, gender, region, type of contract (open-ended or temporary), education level, and sector (essential vs non-essential activities), we find that from the nineth week of the year, there was a pronounced drop in hirings and terminations. On the contrary, firings and quits spiked right after the nineth week, and then dropped significantly, reflecting the effects of the firing freeze and the easing of access to STW compensation schemes. We further explore separations by examining which factors predict the probability of job loss. We find that those workers that were already suffering the consequences of the previous recession (young, temporary, low-skill workers) are those at higher risk of losing their job because of COVID-19.