The effect of shocks to GDP on employment in SADC member states during COVID-19 using a Bayesian hierarchical model
TL;DR: Using a simple Bayesian hierarchical model, the authors provided econometric estimates of annual 2020 employment losses in the context of the COVID-19 pandemic for 15 SADC member states on the basis of historical GDP data.
Abstract: Using a simple Bayesian ?mixed effects? hierarchical model we provide econometric estimates of annual 2020 employment losses in the context of the COVID-19 pandemic for 15 SADC member states on the basis of historical GDP data between 2000 and 2019 and 2020 forecasts. Our mixed effects model consists of country-varying coefficients, as well as ?fixed? (pooled) coefficients. This allows us to fully explore variation between countries. The model provides estimates for losses in total employment and women's employment, from which we infer income losses. We find that roughly half of estimated SADC countries have total employment losses below or approaching 25% of all jobs, while the other half have total losses exceeding 25%. Around one-third of all jobs for women risk being lost during 2020 for Madagascar, Comoros, Angola, Botswana, Namibia, and South Africa. Our model implies that most SADC countries will experience an equivalent loss of wage income in excess of 10% of GDP (whether through pure job losses and/or reductions in wages and working hours). Policy implications are briefly discussed.
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TL;DR: In this paper , the authors provide timely evidence to help with the promotion of policymakers' effective strategies in mitigating economic losses induced by the pandemic; they suggest different governments or policy makers in different countries to share information and experience in dealing with COVID-19-induced economic slowdown and promote COVID19 vaccine popularization plan to protect every individual worldwide against the coronavirus essentially.
Abstract: The COVID-19 pandemic has pressed a pause button on global economic development, and induced significant mental health problems. In order to demonstrate the progressed relationship between the pandemic, economic slowdown, and mental health burden, we overviewed the global-level gross domestic product changes and mental problems variation since the outbreak of COVID-19, and reviewed comprehensively the specific sectors influenced by the pandemic, including international trade, worldwide travel, education system, healthcare system, and individual employment. We hope to provide timely evidence to help with the promotion of policymakers' effective strategies in mitigating economic losses induced by the pandemic; we suggest different governments or policy makers in different countries to share information and experience in dealing with COVID-19-induced economic slowdown and promote COVID-19 vaccine popularization plan to protect every individual worldwide against the coronavirus essentially; and we appeal international information share and collaboration to minimize stigmatization related to adverse mental consequences of COVID-19 and to increase mental health wellbeings of people all over the world.
8 citations
TL;DR: In this article , the authors examined the impact of the COVID-19 pandemic on economies in Africa through the application of a novel Debt, Investment and Growth model with a segmented labor market.
Abstract: Abstract The article examines the impact of the COVID‐19 pandemic on economies in Africa through the application of a novel Debt, Investment and Growth model with a segmented Labor market (DIG‐Labor). The pandemic is modeled via supply shock that disrupts economic activities in countries in Africa, followed by effects on household consumption behavior and welfare, and business investment decisions. The DIG‐Labor model is calibrated to account for informality, which is a key characteristic of economies in Africa. We find that, in the absence of appropriate remedial measures, the COVID‐19 pandemic reduces employment in the formal and informal sectors and scales back consumption for savers and non‐savers, with the reduction in consumption being more pronounced for savers. These contractions lead to an economic recession in Africa and widen the fiscal and current account deficits, among others. The effects of fiscal stimulus packages in response to the COVID‐19 pandemic and various financing mechanisms are also examined. A key finding is that various policy responses to the emerging COVID‐19 induced macroeconomic imbalances have diverse implications, which should be carefully examined to mitigate the negative consequences while maximizing the opportunities for a swift, stronger and more inclusive economic recovery.
5 citations
30 Sep 2021
TL;DR: In this article, the authors analyse and build on the challenges identified in Landsberg's (2012) study The Southern African Development Community decision-making architecture, where he suggests that at the heart of SADCs progress is the need for greater implementation of their set goals and aspirations.
Abstract: The coronavirus disease 2019 (COVID-19) pandemic remains a global security challenge for humanity. The COVID-19 pandemic, a non traditional security threat has exposed how regions respond to non traditional and emerging security threats. Similarly, the South African Development Community (SADC) region remains confronted with security ramifications due to the Covid-19 pandemic. The peace and security of the region has been disturbed due to an upsurge of conflicts in countries, such as South Africa (South Africa’s unrests, protests and the Phoenix Massacre), Lesotho (Eswatini protests) and Mozambique’s (Carbo Delgado insurgency), all amidst the coronavirus global pandemic. Further to this, SADCs human security challenges that have transpired and, in some cases, have been further exacerbated by the Covid-19 pandemic, include economic decline, job losses, food insecurity and the loss of life to mention a few. Prior to the Covid-19 pandemic, SADC Member Stateshave had to exercise greater regional pandemic management with diseases, such as Malaria, Human Acquired Immune (HIV/AIDs) and Tuberculosis (TB). SADCs efforts in combatting these human security threats have been progressive and notable. The study will analyse and build on the challenges, identified in Landsberg’s (2012) study The Southern African Development Community decision-making architecture, where he suggests that at the heart of SADCs progress is the need for greater implementation of their set goals and aspirations. The study will analyse recent efforts, undertaken by the SADC region, in order to determine the successes and challenges, faced by the sub-regional bloc. It is analysing peace and security of SADC under the Covid-19 pandemic through an upsurge of conflicts in the region and the early securitisation and cooperation of the Covid-19 pandemic. The article suggests, SADC strengthened regional cooperation efforts, such as early warning systems and regional execution methods, have fostered advanced regional security outcomesin the region.
3 citations
TL;DR: In this article , the authors highlighted the impact of the COVID-19 lockdown on the South African alcohol and tobacco industries, taking the Johannesburg Stock Exchange-listed British American Tobacco (BTI) and Distell Group Limited (DGH) as cases.
Abstract: South Africa declared a State of National Disaster due to the COVID-19 pandemic, instituting a nationwide lockdown on 26 March 2020. Sale of goods and services classified as non-essential, such as tobacco and liquor, were prohibited, leading to widespread concerns about viability, job losses and investment in these industries. The study highlighted the impact of the COVID-19 lockdown on the South African alcohol and tobacco industries, taking the Johannesburg Stock Exchange-listed British American Tobacco (BTI) and Distell Group Limited (DGH) as cases. The Chow Test was utilised to determine the presence of a structural break on the BTI and DGH share prices on both the pronouncement and enactment days of the COVID-19 lockdown. Furthermore, Threshold Generalised Autoregressive Conditional Heteroskedasticity (TGARCH) (1,1) was also used to test for the effects of the COVID-19 lockdown. The sample data used was daily closing share prices from 9 May 2019 to 9 May 2020, from Google Finance. The results show a structural break on the share prices on the enactment of the 26 March 2020, COVID-19 lockdown. Furthermore, the lockdown had a negative effect on the share prices of BTI and DGH. The study concludes that the COVID-19 lockdown will have long-lasting impacts on the ability of the industries to attract financing for recovery and expansion, and existing shareholders will experience reduced earnings, if any. Policy makers should promote investment by increasing interest rates, promoting local demand and supply, and provide business support to mitigate job losses.
1 citations
References
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25 Jun 2020
TL;DR: In this article, the authors report daily statistics on consumer spending, business revenues, employment rates, and other key indicators disaggregated by county, industry, and income group, and use event study designs to estimate the causal effects of policies aimed at mitigating the adverse impacts of COVID.
Abstract: We build a publicly available platform that tracks economic activity at a granular level in real time using anonymized data from private companies. We report daily statistics on consumer spending, business revenues, employment rates, and other key indicators disaggregated by county, industry, and income group. Using these data, we study the mechanisms through which COVID-19 affected the economy by analyzing heterogeneity in its impacts across geographic areas and income groups. We first show that high-income individuals reduced spending sharply in mid-March 2020, particularly in areas with high rates of COVID-19 infection and in sectors that require physical interaction. This reduction in spending greatly reduced the revenues of businesses that cater to high-income households in person, notably small businesses in affluent ZIP codes. These businesses laid off most of their low-income employees, leading to a surge in unemployment claims in affluent areas. Building on this diagnostic analysis, we use event study designs to estimate the causal effects of policies aimed at mitigating the adverse impacts of COVID. State-ordered reopenings of economies have little impact on local employment. Stimulus payments to low-income households increased consumer spending sharply, but had modest impacts on employment in the short run, perhaps because very little of the increased spending flowed to businesses most affected by the COVID-19 shock. Paycheck Protection Program loans have also had little impact on employment at small businesses. These results suggest that traditional macroeconomic tools – stimulating aggregate demand or providing liquidity to businesses – may have diminished capacity to restore employment when consumer spending is constrained by health concerns. During a pandemic, it may be more fruitful to mitigate economic hardship through social insurance. More broadly, this analysis illustrates how real-time economic tracking using private sector data can help rapidly identify the origins of economic crises and facilitate ongoing evaluation of policy impacts.
458 citations
TL;DR: This paper proposed to include random effects at all potentially relevant levels, thereby avoiding any mismatch between the random and fixed parts of their models, and illustrate these problems using Monte Carlo simulations and two empirical examples.
Abstract: Many surveys of respondents from multiple countries or subnational regions have now been fielded on multiple occasions. Social scientists are regularly using multilevel models to analyse the data generated by such surveys, investigating variation across both space and time. We show, however, that such models are usually specified erroneously. They typically omit one or more relevant random effects, thereby ignoring important clustering in the data, which leads to downward biases in the standard errors. These biases occur even if the fixed effects are specified correctly; if the fixed effects are incorrect, erroneous specification of the random effects worsens biases in the coefficients. We illustrate these problems using Monte Carlo simulations and two empirical examples. Our recommendation to researchers fitting multilevel models to comparative longitudinal survey data is to include random effects at all potentially relevant levels, thereby avoiding any mismatch between the random and fixed parts of their models.
258 citations
TL;DR: From public health, income distribution and food security perspectives, the remarkably rapid and severe shocks imposed because of COVID-19 illustrate the value of having in place transfer policies that support vulnerable households in the event of ‘black swan’ type shocks.
242 citations
01 Sep 2020
TL;DR: In this paper, the authors assess the employment implications of the COVID crisis by classifying economic sectors according to the confinement decrees of three European countries (Germany, Spain and Italy).
Abstract: We contribute to the assessment of the employment implications of the COVID crisis by classifying economic sectors according to the confinement decrees of three European countries (Germany, Spain and Italy). The analysis of these decrees can be used to make a first assessment of the implications of the COVID crisis on labour markets, and also to speculate on mid and long-term developments, since the most and least affected sectors are probably going to continue to operate differently until a vaccine or other long-term solution is found. Using an ad-hoc extraction of EU-LFS data, we apply this classification to the analysis of employment in Germany, Italy and Spain but also UK, Poland and Sweden, in order to cover the whole spectrum of institutional labour market settings within Europe. Our results, in line with recent literature, show that the employment impact is asymmetric within and between countries. In particular, the countries that are being hardest hit by the pandemic itself (Spain and Italy, and also the UK) are the countries more likely to suffer the worst employment implications of the confinement, because of their productive specialisation and labour market institutions. Indeed, these were also the labour markets that were more vulnerable before the crisis: characterised by high unemployment and precarious work (especially temporary contracts).
149 citations
TL;DR: The average effect and the heterogeneity in effects across seven studies using Bayesian hierarchical models are estimated and reasonable external validity is found: true heterogeneity in results is moderate, and approximately 60 percent of observed heterogeneity is sampling variation.
Abstract: Despite evidence from multiple randomized evaluations of micro- credit, questions about external validity have impeded consensus on the results. I jointly estimate the average effect and the heterogeneity in effects across seven studies using Bayesian hierarchical models. I find the impact on household business and consumption variables is unlikely to be transformative and may be negligible. I find reasonable external validity: true heterogeneity in effects is moderate, and approximately 60 percent of observed heterogeneity is sampling variation. Households with previous business experience have larger but more heterogeneous effects. Economic features of microcredit interventions predict variation in effects better than studies’ evaluation protocols.
106 citations