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Low-income earners suffer most from the COVID-19 crisis

Published: 20th April 2020 Last updated: 22nd April 2020

Economists from Tilburg University, the University of Bonn and IZA analyse data on 5,500 respondents

Working from home on full pay is not an option for all employees hit by the corona crisis. To analyse changes in work arrangements during the pandemic, a team of economists from Tilburg University, the University of Bonn en IZA surveyed around 5,500 individuals in the Netherlands from March 20-31. The results show that high-skilled workers spend more time in the home office, while less-skilled workers are more likely to work reduced hours or lose their jobs.

Education plays a key role in terms of being able to work from home, according to new data from the CoViD Impact Lab, a joint research project by the University of Bonn’s ECONtribute Cluster of Excellence and IZA. The researchers compared work arrangements at the onset of the crisis and shortly after social-distancing policies were implemented. Their data are the first to show detailed changes in the proportion of telework among different groups of employees.

High-paid workers benefit from the home office option

The total share of employees who work from home at least two hours a day has doubled from 27 to 54 percent. This is mainly driven by high-skilled workers (76 percent) while only 31 percent of low-skilled workers report at least two home office hours per week since the beginning of the crisis. For university graduates, switching to telecommuting seems relatively easy: While their share of home office hours increased from 11 to 68 percent, the share among the low-educated is only one-fifth. The latter group, instead, experienced a much larger drop in total hours (see Figure 1).

Download figure 1

Double impact of the crisis on low-income earners

The main reason may be that less qualified workers are more often found in occupations where remote work is impossible, such as transportation, retail, or catering. This makes them more prone to job loss or substantial working hour reductions. At the same time, they are less likely to have savings or assets to compensate for income loss, which makes them particularly vulnerable to the crisis and more in need of government support.

Lower educated workers are also found in essential occupations, such as nursing care or grocery retailing. While their jobs are currently safe, they are at higher risk of infection. Home office workers, on the other hand, are protected against both infection and income loss. This aggravates the labor market segmentation into office jobs, characterized by higher education levels and home office rates, and lower-skilled jobs with no home office option (see Figure 2).

Download figure 2

“Our numbers indicate that the low educated are not only less able to work from home but they also reduce the total hours of work more than the highly educated. This indicates that the low educated are a particularly vulnerable group to the current social and economic restrictions in the Netherlands, and that their situation should be monitored closely over the coming months by the Dutch government,” says Bettina Siflinger, a member of CoViD-19 Impact Lab and an assistant professor in econometrics at Tilburg University.

About the dataset

Data were collected through the Dutch LISS panel (Longitudinal Internet Studies for the Social Sciences) which has been surveying 4,500 households regularly on a variety of topics for over ten years. The households are representative of the Dutch population and answer the questionnaires online. For the current wave of the LISS panel, the research team designed a new module to ask panel members about behaviors, beliefs and expectations during the Corona epidemic. The first wave of this module was fielded between March 20 and March 31 among LISS participants aged 16 and over. The response rate was over 80 percent, which translates into a sample of 5,544 individuals. Comprehensive data are not yet available for Germany, but initial trends can be seen. The German data is also being collected via an online survey through GESIS, the Leibniz Institute for the Social Sciences.

More information on the CoViD Impact Lab

https://covid-19-impact-lab.readthedocs.io/en/latest/#

Contact Tilburg University

dr. Bettina Siflinger, Assistant Professor Tilburg School of Economics and Management, Phone: +31134664818, B.M.Siflinger@tilburguniversity.edu

Featured paper

IZA DISCUSSION PAPER NO. 13158

Labour Supply in the Early Stages of the COVID-19 Pandemic: Empirical Evidence on Hours, Home Office, and ExpectationsHans-Martin von Gaudecker, Radost Holler, Lena Janys, Bettina M. Siflinger, Christian Zimpelmann