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Harvard University

The Consequences of Unemployment for Service Sector Workers in the U.S. during COVID-19

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The COVID19 pandemic caused a sharp shock to employment, concentrated in the service sector. Yet, the pandemic recession was also met by an uncharacteristically generous social safety net response. The COVID19 recession presents a key site to advance the rich literature on unemployment and wellbeing by deploying stronger causal estimation strategies and by leveraging the generosity of the governmental response to adjudicate between economic pathways from unemployment to reduced wellbeing and stigma-based pathways. We focus on the U.S. and draw on detailed employer-employee linked cross-sectional (N=15,219) and panel survey (N=3,307) data from hourly service sector workers to estimate the effects of job loss on health and wellbeing. Across employer fixed-effect, lagged dependent variable, and models that focus on job loss due to establishment closure, we find consistent negative effects of unemployment. Unemployment Insurance, while significantly augmented during the crisis, was difficult to access and varied in generosity over time. We show that unemployed workers who accessed UI were no worse off economically than those who remained employed, but far better off than unemployed workers who had not yet received UI. We conclude that much, but not all, of the negative effects of unemployment on health operate through the economic pathway.


Daniel Schneider is Professor of Public Policy and Professor of Sociology at Harvard University.  Danny received his PhD from Princeton University in Sociology and Social Policy in 2012 and then completed a Robert Wood Johnson Foundation Postdoctoral Fellowship in Health Policy Research at Berkeley.  He was Assistant Professor of Sociology at Berkeley between 2012-2020. His research focuses on family demography, inequality, and precarious employment. As Co-Director of The Shift Project, his current research focuses on how precarious and unpredictable work affects household economic security and worker and family health and wellbeing.