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Imran Rasul (UCL)

23 October 2024 @ 12:00 - 13:15

 

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Date:
23 October 2024
Time:
12:00 - 13:15
Event Category:
Academic Events

The Returns to Skills During the Pandemic: Experimental Evidence from Uganda


Abstract: The Covid-19 pandemic represents one of the most significant labor market shocks to the world economy in recent times. We present evidence from a field experiment to understand whether and why skilled and unskilled workers were differentially impacted by the shock, in the context of a low-income economy, Uganda. We leverage a panel of workers and firms, tracked from 2012 to 2022, including high frequency surveys over the pandemic. In 2013, workers were randomly assigned to six months of vocational training, in one of eight high productivity sectors. We document that over the pandemic, employment and earnings follow V-shaped dynamics: treated (skilled) workers were more severely impacted by lockdowns but recovered faster between them, though outcomes remained below pre-pandemic levels by February 2022. Cumulatively over the pandemic, skilled workers spend 61% more time than controls employed in one of the study sectors, and earn 17% more than controls. We explore supply and demand mechanisms that sustained returns to skills. We find that skilled workers were more likely to be laid off early in the pandemic as firms responded to the severe uncertainty by laying off higher earning workers. However, skilled workers recover from this job loss because of their greater accumulation of sector-specific experience pre-pandemic, and the certifiability of their skills enabling them to switch employers in the same sector during the crisis. Our findings have implications for understanding the returns to skills acquired through vocational training in good economic times and times of crisis.