No. 597 - The (little) reallocation potential of workers most hit by the Covid-19 crisis

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by Gaetano Basso, Adele Grompone and Francesca ModenaFebruary 2021

Workers in the accommodation and food services and in entertainment and sport activities - most hit by the pandemic crisis - will face greater difficulties in the labour market if they cannot easily relocate to other sectors. Using Italian administrative data on hirings and contract terminations, the paper analyses job transitions before the COVID-19 pandemic in order to describe job mobility across sectors.

Over a three-year horizon, workers in the accommodation and food services had similar labour market opportunities to those of workers in other service sectors; they were lower for entertainment and sport activities workers. If they found a job, this latter group of workers had a higher probability of moving to another sector. Low skill levels, which characterize workers in the accommodation and food services in particular, might lower the extent of cross-sector mobility. Looking ahead, the potential for reallocation will be limited, in particular if the demand in the service sector drops considerably.

Published in 2021 in: Politica economica/Journal of Economic Policy, v. 37, 2, pp. 151-186