The intensity of COVID‐19 nonpharmaceutical interventions and labor market outcomes in the public sector

This paper examines whether the intensity of nonpharmaceutical interventions (NPIs) during the coronavirus disease 2019 (COVID‐19) pandemic has differentially impacted the public sector labor market outcomes. This extends the analysis of the already documented negative economic consequences of COVID‐19 and their dissimilarities with a typical economic crisis. To capture the intensity of the NPIs, we build a novel index (COVINDEX) using daily information on NPIs merged with state‐level data on out‐of‐home mobility (Google data). We show that among individuals living in a typical state, NPI enforcement during COVID‐19 reduces the likelihood of being employed (at work) by 5% with respect to the pre‐COVID period and the hours worked by 1.3% using data on labor market outcomes from the monthly Current Population Survey and difference‐in‐difference models. This is a sizable amount representing the sector with the higher job security during the pandemic. Public sector workers in a typical state are 4 percentage points more likely to be at work than salaried workers in the private sector and 7 percentage points more likely to be at work than self‐employed workers (the worst so far). Our results are robust to the endogeneity of the NPI measures and present empirical evidence of heterogeneity in response to the NPIs, with those in local employment being the hardest hit.