Labor Markets in Crisis: The Double Liability of Low-Wage Work During COVID-19

Abstract

We adopt a novel identification strategy to examine the heterogeneous effects of Canada’s COVID-19 economic shutdown on hours worked across the earnings distribution. Early labor-market analyses found that workers in the bottom of the earnings distribution experienced a much larger reduction in hours worked than workers in the top of the earnings distribution. Our analysis reveals a double liability of low-wage work during Canada’s COVID-19 economic shutdown: while workers in every quintile experienced a large reduction in hours on average, significant increases in hours were only present among workers in the bottom quintile. Implications for crisis income supports are discussed.