Changes in Labor Market and Income Distribution during the COVID-19 Crisis

Abstract

This study examined the changes in labor market and income distribution during the COVID-19 crisis. First, COVID-19 shock on employment was evident in 2020 and the first half of 2021, and faded away until early 2022. Child care gap due to COVID-19 had a long-lasting negative influence on women's employment with children. A decrease in working hours and an increase in temporary leave were also observed. COVID-19 shock on labor market had largely occurred among the service sector and self-employed. Second, COVID-19 shock on market income distribution was observed in 2020. After controlling for demographic changes, the level of market income ceased to increase in 2020, while poverty and inequality in market income ceased to decrease in 2020. Women with child, self-employed, and lower income group has experienced larger damage. Third, despite COVID-19 shock on market income distribution, disposable income distribution has not worsened due to an increase in public transfer including large-scale relief program.